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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                -----------------

                                   FORM 10-K/A

                               AMENDMENT NO. 1 TO
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

                                -----------------

                                   ACTV, Inc.
             (Exact name of registrant as specified in its charter)

               Delaware                                 94-2907258
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)

               233 Park Avenue South                                   10003
                New York, New York
     (Address of principal executive offices)                       (Zip Code)

                                 (212) 497-7000
              (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12 (g) of the Act:

                     Common Stock, par value $0.10 per share
                                (Title of Class)

                                -----------------

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

         As of April 11, 2002, the aggregate market value of the voting stock
held by non-affiliates of the registrant (based on The Nasdaq Stock Market
closing price of $1.37 on April 11, 2002) was $62,625,017.

         As of April 11, 2002, there were 55,887,327 shares of the registrant's
common stock outstanding.

         The amendment No. 1 to Form 10-K/A is being filed to give effect to the
restatement of the Company's consolidated financial statements as discussed in
Note 21 to the consolidated financial statements.

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                SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

         This annual report on Form 10-K/A contains forward-looking statements
as defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance and underlying assumptions and
other statements that are other than statements of historical facts. These
statements are subject to uncertainties and risks including, but not limited to,
product and service demand and acceptance, changes in technology, economic
conditions, the impact of competition and pricing, government regulation, and
other risks defined in this document and in statements filed from time to time
with the Securities and Exchange Commission. All such forward-looking statements
are expressly qualified by these cautionary statements and any other cautionary
statements that may accompany the forward-looking statements. ACTV, Inc.
disclaims any obligations to update any forward-looking statements to reflect
events or circumstances after the date hereof.

         INTRODUCTORY NOTE

         This amendment No. 1 to Form 10-K/A is being filed to give effect to
the restatement of the Company's consolidated financial statements as discussed
in Note 21 to the consolidated financial statements. The terms "we," "our," and
"ACTV" used herein refer to ACTV, Inc. and its subsidiaries.

                                     PART I

Item 1. Business

Overview

         We are a digital media company that provides proprietary technologies,
tools, and technical and creative services for interactive TV advertising,
programming, and enhanced media applications. We have two operating business
segments, which we call Digital TV and Enhanced Media.

         We believe that our Digital TV technologies are unique in providing
targeting, interactivity and accountability for television commercials, and in
giving viewers the ability to instantly customize their viewing experiences for
a wide variety of programming applications. Our Enhanced Media technologies
allow both for the enhancement of video and audio content, including standard TV
programming, with Web-based information and interactivity.

         We believe the expansion of digital TV transmission systems and the
emergence of platforms providing the simultaneous delivery of video and Internet
content (convergence programming), will allow television distributors,
advertisers and programmers to bring interactivity to a mass audience. We
believe that our proprietary technologies, tools, and technical and creative
services capabilities position us to capitalize on this growth.

         We have received strategic investments from Liberty Media Corporation,
our largest shareholder, and Motorola Broadband Communications Sector.

         ACTV, Inc. was incorporated under the laws of the State of Delaware in
July 1989. It is the successor, by merger effective November 1, 1989, to ACTV,
Inc., a California corporation organized in July 1983. Our executive offices are
located at 233 Park Avenue South, New York, New York 10003, telephone number
(212) 497-7000.

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Industry Environment/ACTV Restructuring Program

         Our industry sector experienced a difficult market environment in
calendar 2001. Cable and satellite operators, TV infrastructure suppliers, and
content providers scaled back many of their Digital TV and Enhanced Media
initiatives. As a result, our businesses recorded revenues well below our
internal projections in 2001. We believe that the current market environment and
the shrinking pool of ad dollars extended the timeframe for deployment of
certain of our products and services.

         In July 2001, we initiated a restructuring program, under which we
realigned our business in response to the current market environment, and as
part of an initiative to rationalize our operations. Some of the specific
actions we took under the restructuring program include:

         o        Reducing our workforce from over 300 employees to
                  approximately 140 employees.

         o        Closing and relocating office facilities to reduce our square
                  footage under lease from over 100,000 to approximately 40,000
                  and our annual lease costs from nearly $3.0 million to
                  approximately $1.0 million.

         o        Eliminating low-margin lines of business, e.g., content
                  creation, that have a high fixed-cost base.

         o        Refocusing our HyperTV business from that of a turn-key
                  supplier of applications and services to a licensor of
                  patented technology.

         The restructuring program represents our effort to conserve resources
while responding to current industry conditions. We expect it to reduce our
costs by approximately $15 million annually after its full implementation, which
should be completed in fiscal 2002. We believe that the measures taken under the
program will provide us the flexibility to meet our customers' current operating
needs without sacrificing our ability to expand our business in response to
future increases in demand for our products and services.

Restructuring Charges

         We recorded restructuring charges in the third and fourth quarters of
2001 totaling $6.6 million. Please refer to Management's Discussion and Analysis
of Financial Condition and Results of Operations for further details regarding
the nature of these charges.

         The downturn in our industry and its effect on our businesses and
strategic investments caused us to reassess the carrying value of certain
long-lived assets. As a result of this valuation analysis, in the fourth quarter
of 2001 we recorded a charge of $11.2 million to write down the value of
goodwill associated with the acquisition of Intellocity to $12 million. In
addition, we recorded charges totaling $1 million to reduce the carried asset
value of our strategic investments to $7.4 million.

Industry Background

 Digital TV

         Our digital TV applications require the digital transmission of
television signals, either through direct broadcast satellite, or DBS, which is
a digital medium, or through a cable system that has been upgraded from

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analog to digital. Historically, the shortage of channel capacity in a typical
cable system, and the lack of digital technology available to provide such
services have limited the development of programming featuring our technology.
However, advances in digital transmission and set-top box technology have begun
to eliminate these barriers to providing interactive programming.

         The development of compression technology and the digital transmission
of television signals allow for the delivery of a greater number of channels
with better audio and video quality over the same cable system. The resulting
expansion of channel capacity permits a cable operator to offer a wider variety
of programming choices. Traditional analog cable systems typically offer a
maximum of less than one hundred programming channels. Current digital
compression technology, however, enables as many as twelve digital channels of
programming using the same bandwidth required for one analog channel.

         The platform required for delivery of our Digital TV applications is
expanding rapidly as DBS subscribers and digital cable subscriber households
increase in the U.S. Kagan World Media forecasts that at the end of 2001, there
were over 14 million U.S. digital cable subscribers. Kagan further projects the
number to grow nearly 40%, to 20 million, by the end of 2002, and to
approximately 44 million in 2007. Kagan estimates that there were approximately
17.6 million DBS subscriber households in the U.S. at the end of 2001, and
forecasts an increase in this number to over 26 million by 2007. In Kagan's
estimation, the total digital penetration in the U.S. will reach over 56% of
total television households by 2007.

         Advertising represents an important application of our Digital TV
technologies. According to Universal McCann's December 2001 Insider's Report,
total TV advertising expenditures in 2000 were $41.2 billion for broadcast and
$15.1 billion for cable and satellite. Traditional television broadcasting,
cable and DBS systems do not provide an integrated means either to deliver
targeted advertising or for viewers to respond to programs and advertisements.
In principle, commercials that can target an audience through the use of
demographic and other relevant viewer information promises to make advertising
more cost efficient. Moreover, many advertisers use television commercials to
generate requests for product information, which in turn serve as sales leads
for their products and services. Today, most direct response television
purchases and requests for information require a telephone call, causing
advertisers to incur a significant cost per transaction. We believe that
television viewers, advertisers and merchants will respond favorably to a
simple, immediate, inexpensive and automated method enabling them to participate
in commerce through the television itself.

 Enhanced Media

         The Internet has grown rapidly over the past several years and is now a
medium used by millions of people for entertainment, education, e-commerce and
multimedia content. Nielsen / Net Ratings estimates that in January 2002 there
were 166.1 million Americans with Internet access. Commerce over the Internet
has grown rapidly in recent years, with annual percentage increases of over 100%
for 1999 and 2000, according to The Forrester Group. Although e-commerce growth
slowed to 12% for the 2001, its total volume exceeded $47 billion, according to
Forrester.

         The growth in Internet usage has created opportunities for television
content providers and their advertising customers to reach and interact with
millions of Internet users. Due to its interactive nature, the Internet is a
medium that has certain advantages over traditional television: it can provide
customized, targeted programming and advertising to consumers and to generate
cost-effective results for advertisers. To combat a loss of audience to the
Internet and to gain online market share, certain broadcasters and cable
programmers are now producing and promoting companion online programming to
traditional TV shows. Despite the recent decline in Internet advertising, we
believe that the opportunities for television programmers to generate additional
ad revenues are growing as advertisers increasingly recognize the potential
advantages of Internet-based advertising that complements television
programming. We believe that we are well positioned to take advantage of this
shift from

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single media source content to a convergence of television and Internet content.

Digital TV

         Our Digital TV technologies are patented processes for creating
interactive customized television content and advertising in response to viewer
remote control entries or to information stored locally in a viewer's set-top
box. Our software-only application, which can reside in a digital set-top box or
other local device, such as a personal video recorder (PVR) or video on demand
system (VOD), remembers a viewer's inputs throughout a program and can later
deliver tailored content to the viewer based on those inputs. Our digital TV
technology allows us to send the viewer multiple television signals, related in
time and content, and for the switching among those signals without a visually
perceptible delay. The viewer experiences the video, audio and graphics of a
single fluid programming stream, while the programming on the other signals
remains transparent.

         The first commercial applications of our Digital TV technologies will
be for advertising and sports entertainment programming. We have branded our
Digital TV applications for advertising and entertainment as SpotOn and One To
One TV, respectively. Our Digital TV technologies allow, for example, neighbors
to watch the same television program while seeing entirely different
advertisements based upon demographic information, or a sporting event featuring
a different view of the action, highlight packages, statistics or instant
replays.

         We are initially targeting SpotOn and One To One TV for distribution
through cable operators that have deployed digital transmission systems and
through DBS operators. We expect eventually to offer our Digital TV applications
through other programming distribution systems, including terrestrial digital.
To receive SpotOn and One To One TV, all a viewer needs is a digital set-top box
with our software download. We have agreements with leading manufacturers of
digital set-top terminals including Motorola Broadband Communications Sector and
Scientific-Atlanta for the integration of our software into their systems.

 SpotOn and One To One TV

         We created a company with Motorola Broadband, called Digital ADCO,
Inc., which developed the SpotOn applications and services. OpenTV later joined
Motorola and ACTV as a shareholder of Digital ADCO, Inc. SpotOn is a
comprehensive end-to-end system that allows digital cable, satellite and
broadcast systems to offer targeting, interactivity and accountability for
television commercials. We believe that SpotOn will improve the effectiveness of
television advertising.

         Based on proprietary technologies contributed by Motorola, OpenTV and
ACTV, SpotOn provides an array of functionalities that we believe are unique.
For example, our software can instantaneously choose the most appropriate
commercial for each viewer from a number of alternatives received by the
viewer's set-top. SpotOn's logic function makes this choice based either on
demographic information that the TV distributor, e.g., cable operator, has
downloaded to the set-top box or on remote control responses keyed in by the
viewer. SpotOn can discern that a viewer is watching a program with subtitles in
a second language, and deliver commercials in that language.

         With SpotOn, an advertiser can give viewers a choice of commercials,
allowing them to select those of most relevance. Ads can contain program
branches that allow the commercial itself to change course in response to viewer
selections.

         In addition, SpotOn provides the means for advertisers to receive
aggregate viewer data for each commercial. This information might include the
actual number of homes, by geographic area, where a given commercial was
displayed as well as the percentage of viewers who changed channels or muted the
sound during the commercial.

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         SpotOn allows for permission-based marketing. A subscriber might
request additional information on a product or make merchandise purchases
through the set-top box, enabled with SpotOn software.

         The deployment of SpotOn in a cable system involves principally the
installation of software at the headend and a separate software download to
subscriber set-top boxes. Depending on how the headend is equipped, a minimal
investment in hardware may also be required. SpotOn, which is compatible with a
majority of digital cable set-tops currently deployed in the United States, is
not dependent on the roll-out of the next generation of digital boxes.

         In a typical configuration, SpotOn's software application is resident
in the set-top box, where it monitors programming streams coming into the box as
well as viewer remote control selections. Commercials that are intended for a
targeted audience are marked with our proprietary digital codes that identify
them as SpotOn-enabled. Our software in the set-top box reads the codes as the
commercials are received and, in real time, determines the most appropriate one.
SpotOn is then able to insert this ad into the TV programming stream without any
visually perceptible delay. The viewer is unaware that such a switch has
occurred.

         We expect SpotOn to generate revenues from multiple sources. We intend
to charge a license fee to the TV distributors that deploy the system, as well
as upstream license fees to programmers and advertising interconnects. We expect
to receive fees from advertisers for encoding targeted commercials, for the
storage and transit of the ads, and for creative services. We believe that we
will be able to charge a tolling fee for enabling television commerce
transactions and that we can generate revenues from programmers and advertisers
for data reporting and analysis.

         We introduced SpotOn in late 2001 through a trial at the AT&T Broadband
cable system in Aurora, Colorado, which has approximately 40,000 digital
subscribers. SpotOn is available on AT&T Broadband's currently deployed DCT-2000
digital set-top boxes. We have successfully completed the technical phase of the
trial and will conduct the research phase of the trial during 2002.

         We intend to offer One To One TV entertainment programming on a
pay-per-view and subscription basis. We believe that the first entertainment
applications of One To One TV, whether distributed on a pay-per-view or
subscription basis, will be for sports. We believe that sports programming
represents a compelling application of One To One TV. Our Digital TV
technologies allow sports fans to completely individualize their TV viewing
experience using a standard remote control.

Advision, LLC

         In December 2000 we acquired a controlling interest in the assets of
VisionTel, Inc., from nCUBE Corporation, which retains a minority interest. We
formed a new partnership entity, Advision LLC, to hold these assets. Advision
LLC's principal product is the Advision(R) software suite for advertising sales
management in cable, broadband, broadcast, satellite, and Internet services. We
believe that Advision is a complement to SpotOn, since it provides software for
the trafficking and billing of commercials delivered through advanced digital
cable and DBS headends.

Digital Television Services

         We provide technical services for digital interactive television, or
iTV, primarily through our Intellocity division. Intellocity, Inc., which we
acquired in March 2001 through an exchange of stock, is a leader in the design,
development and integration of iTV infrastructure and content. Clients for our
technical services include broadband operators, content providers and platform
and infrastructure providers. Services for broadband network operators

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include:

         o        System architecture design, implementation, and integration
                  for broadband

         o        Content developer's kit

         o        Navigator/portal strategy and implementation

Services for infrastructure suppliers include:

         o        Platform integration and development

         o        Enterprise architecture and integration

         o        Operating system extensions and enhancements

Services for content providers include:

         o        Content design and development, encompassing enhanced TV
                  content, navigation shells and portals

         o        Web content re-purposing, and interactive advertising

         o        System architecture for content delivery and management

         o        Integration of content onto multiple iTV platforms

One customer, nCube Corporation, in our digital television segment constituted
16% of total company revenue for 2001 and represented 33% of the Company's
accounts receivable balance at December 31, 2001. For further discussion
regarding segment information, see Note 13 to the consolidated financial
statements.

Enhanced Media

 Overview

         Our Enhanced Media business segment serves the market for interactive
convergence programming, which combines video and or audio programming with Web
content. We market Enhanced Media applications and services through the brand
names of HyperTV with Livewire, and eSchool Online. HyperTV with Livewire and
eSchool Online provide convergence software and services to the entertainment
and education markets, respectively.

         Our Enhanced Media business derives revenues from a number of sources,
including software licensing, technical and content services, data management,
online advertising sales, and e-commerce.

         We believe that our Enhanced Media technologies have potential
applications for most forms of television and radio programming and advertising.
For instance:

         o        while watching a sports show on television, viewers can
                  compete with other fans--using a Web-enabled box, a computer
                  connected to the Internet, or even a wireless hand-held
                  device;

         o        viewers of a rock concert being streamed through the Internet
                  can receive synchronized Web pushes with song lyrics,
                  information about the band, and special offers to purchase CDs
                  of the band or

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                  other merchandise;

         o        a TV car commercial can automatically deliver more detailed
                  information through the Internet and let viewers link to local
                  dealer Websites where viewers can schedule test drives.

 HyperTV

         HyperTV is a suite of patented processes that enhance a television
program or advertisement with related and synchronized content delivered through
the Internet. HyperTV works by embedding a stream of Web page addresses into a
video or audio signal or by transmitting the addresses directly over the
Internet to a user's computer or wireless device. The Web content is
synchronized to programming being shown on a particular television channel,
streamed through the Internet, or played through a local storage device, such as
a DVD player.

         In April 2000, we entered into an agreement with Liberty Livewire to
jointly market HyperTV with Livewire. Liberty Livewire is a U.S. leader in audio
and video post-production and location services. The agreement gives Liberty
Livewire, a unit of Liberty Media, the right to provide content creation
services and, through its affiliate AT&T IP Services, a scaleable hosting
infrastructure for HyperTV with Livewire. Pursuant to the agreement creating
HyperTV with Livewire, we received warrants to purchase 2.5 million shares of
Liberty Livewire common stock. Such warrant resulted in the recording of
deferred revenue to be recognized over 21 years, the period of our joint
marketing arrangement with Livewire. Liberty Livewire is a 16% investor in ACTV.

         HyperTV with Livewire's clients have included TV networks and producers
of traditional media content. HyperTV with Livewire provides a turnkey system
consisting of user software, Web content creation software and creative
services, database management and analysis and program hosting.

         We were one of the first companies to provide convergence software and
services. During the years 2000 and 2001, we enabled hundreds of hours of
HyperTV with Livewire programming for music, movies, sports, games and live
programming. During 2001, after initiating a patent infringement lawsuit against
The Walt Disney Company and certain subsidiaries (see Item 3. Legal
Proceedings), our HyperTV with Livewire business began to decline. We believe
the decline can be attributed to a number of factors:

         *        reluctance of certain potential clients to employ our
                  technology pending resolution of the lawsuit with Disney;

         *        strong price competition from competitors;

         *        contraction of overall ad spending in the U.S.;

         *        sluggish growth in the demand for so-called "two box"
                  convergence.

To receive "two box" convergent programming, a viewer must have a television and
separate computer connected to the Internet in the same room.

         In response to the slowdown in HyperTV with Livewire, we have chosen to
restructure the business by renewing our focus on technology licensing. We were
able to achieve significant personnel cost savings as a result of this
restructuring.

 Education

         eSchool Online was the first commercial application of our Enhanced
Media technologies. eSchool integrates educational video with relevant Web
content, interactivity and chat functionality on a student's computer screen. In
addition, eSchool provides teachers and administrators with an application that
allows for online assessment of a student performance.

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         We have provided eSchool software and content and technical services to
state departments of education, school districts, and schools throughout the
United States. Over the past several years, we began to focus eSchool on the
professional development market. During 2000, we had major projects in
California, Texas and Alabama for teacher training in Remedial Reading, Algebra,
and Internet skills.

         Traditionally, we have provided eSchool Online applications and
services on a custom development basis to individual education clients. Starting
in the year 2000, we began to market completed eSchool programs to third
parties, under licensing agreements with the clients for whom the programs were
originally produced. We are currently building a library of licensed eSchool
content that is available for nationwide distribution.

 Enhanced Media Platforms

         Our goal is to extend our Enhanced Media technologies to all relevant
platforms for convergence programming, including Internet-enabled handheld
devices (such as cellular phones and personal digital assistants), and media
streamed through the Internet.

For the years ended December 31, 2001, 2000 and 1999, certain individual
customers in the Enhanced Media segment accounted for more than 10% of the
Company's revenues as follows:

Customer                                        2001       2000       1999
-----------------------------------------     -------    -------     ------
The State of Alabama                            11%        23%
San Diego County Office of Education                                   11%
NYC School Construction Authority                                      12%

In addition, the recognition of revenue resulting from the amortization of
deferred revenue associated with our joint marketing arrangement with Livewire
accounted for approximately 26% and 23% of the Company's total revenues for the
years ended December 31, 2001 and 2000.

As of December 31, 2000, one customer, The State of Alabama, represented 32% of
the Company's accounts receivable balance.

For further discussion regarding segment information, see Note 13 to the
consolidated financial statements.

Equipment Suppliers

         We do not intend to manufacture set-top converters, terminals, video
servers or other devices in connection with any of our applications or services.

         We have non-exclusive, royalty-free agreements with Motorola Broadband
and Scientific-Atlanta, the dominant suppliers of set-top terminals in the
United States, for the integration of our Digital TV technologies into their
digital set-top boxes.

         In addition, we have agreements with the leading providers of set-top
box middleware, including OpenTV, Liberate and MicrosoftTV, to ensure the
compatibility of our Digital TV technologies with their platforms. Middleware is
set-top box software that acts as an operating system for the terminal.

         We may grant licenses similar to those granted to Motorola Broadband,
Scientific-Atlanta and Pioneer to other manufacturers that are selected by the
future distributors of Spot On and One To One TV.

Patents and Other Intellectual Property

         We have sought to protect the proprietary features of our
individualized programming technologies and

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Enhanced Media technologies through patents, copyrights, confidentiality
agreements and trade secrets both in the United States and overseas. As of the
present time, the United States Patent and Trademark Office has issued 25
patents to us that are currently in force. We also have additional patents
pending. The patents expire at various dates from 2003 to 2018. Corresponding
patents for some of the above U.S. patents have been granted by or are pending
in the Patent Offices of Canada, Japan, South Korea, China, Singapore, India,
Australia and Europe. We believe such patents will strengthen our competitive
position in these countries.

         There can be no assurance that our patents are enforceable, or, if
challenged, that we can successfully defend them, particularly in view of the
high cost of patent litigation, nor can there be any assurance that we will
derive any competitive advantages from them. To the extent that patents are not
issued for any other products developed by us, we would be subject to more
competition. The issuance of patents may be insufficient to prevent competitors
from essentially duplicating our products by designing around the patented
aspects. In addition, we cannot assure you that our products will not infringe
on patents owned by others, licenses to which may not be available to us, nor
that competitors will not develop functionally similar products outside the
protection of any patents we have or may obtain.

         The inventors named on all of our issued patents have assigned to us
all right, title and interest in and to the above U.S. patents and any
corresponding foreign patents or applications based thereon. We require that
each of our full time employees, consultants and advisors execute a
confidentiality and assignment of proprietary rights agreement upon the
commencement of employment or a consulting relationship. These arrangements
generally provide that all inventions, ideas and improvements made or conceived
by the individual arising out of the employment or consulting relationship are
our exclusive property. These agreements generally also require all such
information be kept confidential and not disclosed to third parties, except with
our consent or in specified circumstances. We cannot assure, however, that these
agreements will provide effective protection for our proprietary information in
the event of unauthorized use or disclosure of such information.

Competition

         The markets for digital television and enhanced media applications and
services are extremely competitive, and we expect competition to intensify in
the future. These markets are new, quickly evolving and characterized by
untested consumer demand and a lack of industry standards. They are, therefore,
subject to significant changes in the products and services offered by existing
market participants and the emergence of new market participants. As a result,
it is difficult to determine which companies and technologies are competing with
us or may compete with us in the future in one or more of our businesses.

         We believe our competitors in Enhanced Media services markets include
Gold Pocket, Spiderdance, Merlin TV, Digeo, Wink and Worldgate Communications,
Inc. We also face competition from traditional television and cable broadcasters
such as ABC, CBS, FOX, and NBC. Some of these broadcasters have in the past, and
may in the future, develop and broadcast their own television/Internet
convergence programming. (See Item 3. LEGAL PROCEEDINGS--Action against the Walt
Disney Co., ABC, Inc., and ESPN, Inc.) In addition, we may face future
competition with companies such as Microsoft, RealNetworks, Inc., and Veon that
provide applications allowing video content to be "streamed" over the Internet.
Many of these applications could be extended to compete with some or all of our
existing or proposed enhanced media offerings.

         We believe our competitors in the targeted TV advertising market,
include Visible World, NAVIC and Ad-Exact. We do not believe that there are
currently any competitors offering products comparable to One To One TV, but
there are a number of companies, including NDS Group plc, that market products
and services outside the U.S. that have limited functionalities in common with
this product. Finally, our Digital TV products compete in a sense for limited
"shelf space" within a digital set-top box with other dissimilar applications,
such as video on demand, high definition television, and telephony. For the
interactive TV technical services market, our competitors include Spyglass (a
division of OpenTV), Concero Inc., Rachis, MetaTV, and Digeo.

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Government Regulation

         We believe that neither our present nor future implementation of One To
One TV or SpotOn is subject to any direct substantial government regulation.
However, the broadcast industry in general, and cable television, DBS and
wireless communication in particular, are subject to substantial government
regulation.

         Cable Television. Pursuant to federal legislation enacted in 1992,
which we call the 1992 Cable Act, and amended by the Telecommunications Act of
1996, the Federal Communications Commission substantially re-regulated the cable
television industry in various areas, including rate regulation, competitive
access to programming, and "must carry" and retransmission consent for broadcast
stations. These rules, among other things, restrict the extent to which a cable
system may profit from, or recover costs associated with, adding new program
channels, impose certain carriage requirements with respect to television
broadcast stations, limit exclusivity provisions in programming contracts, and
require prior notice for channel additions, deletions and changes. The Cable Act
also regulates the collection and use of subscriber information over cable
systems by cable operators and their affiliates. The United States Congress and
the FCC also have under consideration, and may in the future adopt, new laws,
regulations and policies regarding a wide variety of matters which could,
directly or indirectly, materially adversely affect our operations. In
particular, the FCC recently initiated an inquiry to determine whether the cable
industry's future provision of interactive services should be subject to
regulations ensuring equal access and competition among service vendors.

         Internet. Increased regulation of the Internet might slow the growth in
use of the Internet, which could decrease demand for our services, increase our
cost of doing business or otherwise have a material adverse effect on our
business, financial condition and results of operations. Congress has passed
legislation regulating certain aspects regarding the use of the Internet,
including children's protection, copyright infringement, user privacy, taxation,
access charges and liability for third-party activities. The Federal Trade
Commission has adopted regulations enacting the Children's Online Privacy
Protection Act, which govern collection and use of information over the Internet
regarding children. In addition, federal, state and local governmental
organizations as well as foreign governments are considering other legislative
and regulatory proposals that would regulate the Internet. Areas of potential
regulation include libel, pricing, quality of products and services,
intellectual property ownership and personal privacy. Storage and use of
personal information is subject to state and federal regulation. Storage and use
of such information may also subject us to privacy claims relating to our use
and dissemination of personal information. We do not know how courts will
interpret laws governing the Internet or the extent to which they will apply
existing laws regulating issues such as property ownership, libel and personal
privacy to the Internet. Therefore, we are not certain how new laws governing
the Internet or other existing laws will affect our business.

         We are unable to predict the outcome of future federal legislation or
regulatory proposals or the impact of any current or future laws or regulations
on our operations. There can be no assurance that we will be able to comply with
any future laws or regulations that may be imposed on our operations.

Employees

As of October 24, 2002, we employed 132 full-time employees. We are not subject
to any collective bargaining agreements; we believe that our relationships with
our employees are generally satisfactory.

Properties

         We maintain our principal and executive offices at 233 Park Avenue
South, New York, New York, where we lease approximately 12,000 square feet. Our
lease for this facility extends through 2016. We also lease offices and
technical space totaling approximately 24,000 square feet in six other
facilities, located in New Jersey, Colorado, Oklahoma, and Holland. These leases
expire at various dates through 2005.

                                       11
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<PAGE>


Item 3. Legal Proceedings

         ACTV, Inc. and its wholly-owned subsidiary HyperTV Networks, Inc. are
co-plaintiffs in a civil action filed against The Walt Disney Co., ABC, Inc. and
ESPN, Inc. in December, 2000, which action alleges that the defendants'
"Enhanced TV" system synchronizing a web site application to, amongst others,
ESPN Sunday Night and ABC Monday Night Football telecasts has infringed and is
continuing to infringe certain of the plaintiffs' patents. That action is
continuing in the U.S. District Court, Southern District of New York.

Item 4. Submission of Matters to a Vote of Security Holders

         On August 24, 2001 we held our Annual Meeting of Shareholders for which
we solicited votes by proxy. The following is a brief description of the matters
voted upon at the meeting and a statement of the number of votes cast for and
against, and the number of abstentions as to each matter.

1. Election of directors

                                                 For             Withheld
                                         ----------------------------------
       David Reese                           45,578,778          1,610,683
       Michael J. Pohl                       45,952,844          1,236,617

 2. To approve the adoption of the ACTV's 2001 Stock Incentive Plan.

        For                    Against                 Abstain
--------------------- ------------------------------------------------
     42,840,111               4,247,436                101,914

 3. To ratify the appointment of Deloitte & Touche, LLP as independent auditors.

        For                    Against                 Abstain
--------------------- ------------------------------------------------
     46,815,956                331,257                  42,248

                                       12
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<PAGE>


                                     PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters

         ACTV's common stock is traded on The Nasdaq Stock Market under the
symbols "IATV". The following table sets forth the high and low bid prices for
ACTV common stock as reported by Nasdaq.

                                          Common Stock
                                 ------------------------------------
         2001 Quarter                    High                  Low
         ----------------        --------------- --------------------
         First                            7.875                3.250
         Second                           4.125                2.220
         Third                            3.280                1.340
         Fourth                           2.260                1.260

         2000 Quarter                    High                  Low
         ----------------        --------------- --------------------
         First                           46.125               20.000
         Second                          34.750                9.688
         Third                           19.375               10.750
         Fourth                          14.313                3.000


         On April 11, 2002, there were approximately 570 holders of record of
our 55,887,327 outstanding shares of common stock. On April 11, 2002 the high
and low bid prices of our common stock as reported by Nasdaq were $1.46 and
$1.33, respectively. We have not paid cash dividends since our organization. We
plan to use earnings, if any, to fund growth and do not anticipate the
declaration of the payment of cash dividends in the foreseeable future.

                                       13
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<PAGE>

Item 6.  Selected Financial Data


<TABLE>
<CAPTION>
                                                                  Years Ended December 31,
                                           -----------------------------------------------------------------------
                                               2001          2000           1999          1998          1997
                                           ------------- -------------  ------------- ------------- --------------
                                                          ($000's except share and per share data)
<S>                                        <C>           <C>            <C>           <C>           <C>
Statement of Operations Data:
   Revenues                                $     13,689  $      8,016   $      2,910  $      1,625  $       1,948
                                           ------------- -------------  ------------- ------------- --------------

   Net (loss)income before preferred
     stock dividends, extraordinary
     item and cumulative effect of
     accounting change                          (42,658)      153,504       (234,875)      (23,342)        (8,394)
   Cumulative transition effect of
     adopting SFAS No 133                       (58,732)           --             --            --             --

   Net (loss)income                            (101,390)      152,093       (234,875)      (23,342)        (8,394)
                                           ============= =============  ============= ============= ==============
   Basic
   (Loss)/income per share before
     extraordinary item and cumulative
     effect of accounting change           $      (0.77) $       3.10   $      (6.11) $      (1.10) $       (0.64)
   Extraordinary item                                --         (0.03)            --            --             --
   Cumulative transition effect of
     adopting SFAS No. 133                        (1.07)
                                           ------------- -------------  ------------- ------------- --------------
   Basic (loss)/income per share           $      (1.84) $       3.07   $      (6.11) $      (1.10) $       (0.64)
     applicable to common shareholders
                                           ============= =============  ============= ============= ==============
   Diluted
   (Loss)/income per common share
     before extraordinary item and
     cumulative effect of accounting
     change                                $      (0.77) $       2.53   $      (6.11) $      (1.10) $       (0.64)
   Extraordinary item                                --         (0.02)            --            --             --
   Cumulative transition effect of
     adopting SFAS No. 133                        (1.07)           --             --            --             --
                                           ------------- -------------  ------------- ------------- --------------
   Diluted (loss)/income per share         $      (1.84) $       2.51   $      (6.11) $      (1.10) $       (0.64)
     applicable to common shareholders
                                           ============= =============  ============= ============= ==============
   Balance Sheet Data:
     Cash and cash equivalents             $     69,036  $    122,488   $      9,413  $      5,198  $         658
     Working capital (deficiency)                71,271       115,684          9,151         3,007         (1,062)
     Total assets                               139,587       235,509         28,984        13,616          7,902
     Long-term debt (including current
        portion)                                     --            --          4,804         4,315             --

</TABLE>

         The historical financial information has been restated to include the
accounts and results of operations of Bottle Rocket Inc., which was acquired on
August 17, 2000, in a transaction accounted for under the pooling of interests
method, as described in Note 3 in the consolidated financial statements.

                                       14
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<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

         You should read the following discussion together with our consolidated
financial statements and related notes included elsewhere and incorporated by
reference. The results discussed below are not necessarily indicative of the
results to be expected in any future periods. To the extent that the information
presented in this discussion addresses financial projections, information or
expectations about our products or markets or otherwise makes statements about
future events, such statements are forward-looking and are subject to a number
of risks and uncertainties that could cause actual results to differ materially
from the statements made. See "Special Note Regarding Forward-Looking
Statements" for further information about forward-looking statements.

         We are a digital media company that provides proprietary technologies,
tools, and technical and creative services for interactive TV advertising,
programming, and enhanced media applications. We have two operating business
segments, which we call Digital TV and Enhanced Media.

         We believe that our Digital TV technologies are unique in providing
targeting, interactivity and accountability for television commercials, and in
giving viewers the ability to instantly customize their viewing experiences for
a wide variety of programming applications. Our Enhanced Media technologies
allow both for the enhancement of video and audio content, including standard TV
programming, with Web-based information and interactivity.

RESULTS OF OPERATIONS

Comparison of Fiscal Year Ended December 31, 2001 and December 31, 2000

         Revenues. Revenues increased 71% to $13.7 million for the year ended
December 31, 2001, from $8.0 million for the year ended December 31, 2000. The
increase is the result of the inclusion in the more recent year of revenues from
our Digital TV segment, which accounted for approximately 30% of total revenues.
For the year ended December 31, 2000, all of our revenue was derived from
Enhanced Media licensing and services. Digital television revenues for 2001 were
principally from professional and technical services delivered through
Intellocity, which we acquired in March 2001, and software licensing and
services revenue through Advision, which we acquired January 1, 2001. Revenues
for the years ended December 31, 2001 and 2000 included $3.6 million and $1.8
million, respectively, (26% and 23%, respectively, of total revenues) related to
the recognition of revenue from the Livewire joint marketing arrangement.

         Goodwill Impairment Charge. During the fourth quarter of 2001, we
recorded a non-cash impairment charge of $11.2 million related to the goodwill
associated with the Intellocity acquisition. Intellocity's inability to achieve
the operating results specified in its 2001 budget (it operated at a loss for
fiscal 2001) triggered an impairment review in the fourth quarter of its
long-lived assets. We developed a revised operating plan to restructure and
stabilize the business. The revised projections by service line provided the
basis for measurement of the asset impairment charge. We calculated the present
value of expected future cash flows of Intellocity's service lines to determine
the fair value of the assets. Accordingly, in the fourth quarter of 2001, we
recorded an impairment charge of $11.2 million.

         Restructuring Charge. For the year ended December 31, 2001, we recorded
an expense of $6.6 million, the

                                       15
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<PAGE>

majority of which was non-cash, related to restructuring initiatives. This
expense includes charges for the surrender of real estate leases and employee
severance costs. Pursuant to the surrender--agreed to in September 2001--of
certain of our New York City leases, we received cash and cash equivalents of
approximately $9.3 million in the fourth quarter of 2001. This change in cash
and cash equivalents was a result of payments from third parties and a release
of restricted cash formerly used to guarantee the leases. At December 31, 2001
we had $0.8 million remaining in accrued restructuring charges to be paid out
over the first two quarters of 2002.

         Stock-Based Compensation. Stock-based compensation resulted in a credit
for the year ended December 31, 2001 of $12.1 million, compared with a credit of
$186.7 million for the year ended December 31, 2000. The reduction in expense
was the result of a continued lower market price of our common stock at December
2001. We recorded stock-based compensation expense based on increases and
decreases in the market price of our common stock above the exercise price of
certain employee options, which were subject to variable option accounting
treatment. To the extent that we had a stock-based compensation obligation at
the beginning of a given reporting period, we recognized a reduction in expense
related to the unexercised vested variable options for that period based on a
reduction of the market price for our stock at the end of the period.

         Total Selling, General and Administrative Expenses. Total selling,
general and administrative expenses for year ended December 31, 2001 were $46.6
million, compared with $45.7 million for the year ended December 31, 2000, an
increase of 2.0%. The increase in costs was attributable to the inclusion in the
more recent year of the operations of Intellocity and Advision, both of which we
acquired during 2001. Excluding the effect of Intellocity and Advision, our
total selling, general and administrative expenses declined $6.0 million, or
13.0% in the more recent year. This decrease is the result of cost cutting
measures we adopted in the third and fourth quarters of 2001, including a
significant reduction in personnel and occupancy costs. Selling and
administrative expenses for 2001 and 2000 include $2.3 million and $6.9 million,
respectively, of deferred compensation expense, of which $1.5 million and $4.5
million, respectively, was non-cash.

         Other Expense. Other expense in 2001 includes the changes in fair value
of an investment in warrant which is now accounted for as a derivative
instrument after adoption of SFAS No. 133 and the application of its
requirements. Prior to the adoption of SFAS 133 in 2001 these warrants were
carried at cost. With the adoption of SFAS 133, the Livewire investment is now
recorded at fair value. We recorded a net decrease in the value of the
investment in warrant of $1.0 million for the year ended December 31, 2001. For
the year ended December 31, 2001 and 2000, other expense also includes a $1.0
million and $0.8 million write-down related to certain of our strategic
investments that we deemed to be other than temporarily impaired.

         Depreciation and Amortization. Depreciation and amortization expense
increased $5.5 million for the year ended December 31, 2001, to $9.4 million,
from $3.9 million during the same period of 2000, due primarily to our
increasing investment in patents, software development, and equipment and
additional goodwill recorded in connection with our purchase of Intellocity,
Inc. in March 2001.

         Interest (Expense)/Income. Interest income, net of interest expense,
for the year ended December 31, 2001 was $4.2 million, compared with net
interest income of $7.4 million for the year ended December 31, 2000. The
decrease was the result of lower cash balances in 2001. We incurred interest
expense for 2000 of $0.3 million, compared to $0 for 2001. Interest expense for
2000 relates to the $5 million original face value notes issued by a subsidiary
of ours in January 1998; the notes were retired on April 3, 2000.

         Minority Interest. The minority interest benefit for the year ended
December 31, 2001 was $3.2 million, compared with a benefit of $1.7 million in
2000. The benefit is primarily attributable to the minority interest held by
others in Digital ADCO.

         Extraordinary Item. We recorded an extraordinary loss in 2000 of $1.4
million, resulting from the early extinguishment of $5.0 million notes issued in
January 1998.

         Cumulative Transition Effect of Change in Accounting Principle.
Effective January 1, 2001, ACTV adopted FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by SFAS
137 and 138. SFAS 133 requires that all derivative financial instruments be
recorded in the balance sheet at fair value. The provisions of SFAS 133 affected
the Company's accounting for its investment of 2.5 million restricted warrants
for Livewire. Prior to the adoption of SFAS 133, these warrants were carried at
cost. With the adoption of SFAS 133, the Livewire investment is now

                                       16
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<PAGE>

recorded at fair value. This resulted in the Company recording a cumulative
effect transition adjustment loss of approximately $58.7 million at January 1,
2001. There may be periods with significant non-cash increases or decreases to
the Company's net income/loss as a result of the changes in fair value of the
Livewire investment.

         Net Loss Applicable to Common Shareholders. For the year ended December
31, 2001, our net loss applicable to common stockholders after extraordinary
loss and cumulative effect of accounting change was $101.4 million, or $1.84 per
basic and diluted share, compared with net income of $152.1 million, or $3.07
per basic share and $2.51 per diluted share, for 2000. The significant
difference between the two years was the result of predominately non-cash items,
including a reduced expense reduction from stock-based compensation, a goodwill
impairment charge, restructuring expense, and the cumulative effect of
accounting change relating to the adoption of SFAS 133 incurred during the more
recent year.

Comparison of Fiscal Year Ended December 31, 2000 and December 31, 1999

         Revenues. Revenues increased 176% to $8.0 million for the year ended
December 31, 2000, from $2.9 million for the year ended December 31, 1999, due
to an increase in Enhanced Media sales. Approximately $1.8 million of the
increase was from recognition of revenue from the joint marketing arrangement
with Liberty Livewire. The majority of our revenues in 1999 were derived from
sales of HyperTV and Bottle Rocket software, services and related computer
hardware.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 84% to $45.7 million for the year ended
December 31, 2000, from $24.8 million for the year ended December 31, 1999. The
increase was principally the result of higher personnel costs both from
increased headcount and from non-cash, executive incentive compensation, which
was paid in the form of common stock. The more recent period also included
selling and administrative expenses associated with our Digital ADCO subsidiary,
which had only minimal activity in 1999, the year of its formation.

         Other. Other expense in 2000 represents a write-off of an equity
investment in a privately held company for $750,000. No similar expense was
incurred in 1999.

         Depreciation and Amortization. Our depreciation and amortization
expense increased approximately $1.8 million, or 84%, principally due to an
increase in software development and intellectual property assets.

         Stock-Based Compensation. Stock-based compensation resulted in a credit
for the year ended December 31, 2000 of $186.7 million, as compared with an
expense of $208.3 million for the year ended December 31, 1999. We recorded a
charge or a credit to stock-based compensation expense based on increases and
decreases in the market value of our common stock in excess of the exercise
price of certain employee options, which were subject to variable option
accounting treatment. We recorded a credit in stock-based compensation for the
year ended December 31, 2000 as the market price of our common stock declined in
2000 as compared to its value as of December 31, 1999. Conversely, we recorded a
charge to stock-based compensation for the year ended December 31, 1999 as the
market price of our common stock increased in 1999 as compared to its value as
of December 31, 1998.

         Stock Appreciation Rights. There were no stock appreciation right costs
in 2000 as the plan was terminated. There were approximately $2.0 million of
stock appreciation right costs in 1999.

         Interest (Expense) Income-Net. Interest expense decreased 70% to $0.3
million for the year ended December 31, 2000, from $1.0 million for the year
ended December 31, 1999. Interest expense is related to the $5.0 million notes
issued in January 1998 by one of our subsidiaries. Interest income increased
1,559% to $7.7 million for the year ended December 31, 2000, from $0.5 million
for the year ended December 31, 1999. The increase was due to higher average
cash balances in 2000.

         Minority Interest. The minority interest benefit for the year ended
December 31, 2000 was $1.7 million compared with expense of $588 in 1999. The
benefit is attributable to the minority interest held by others in Digital
ADCO, which was formed in November 1999.

         Extraordinary Item. We recorded an extraordinary loss in 2000 of $1.4
million, resulting from the early extinguishment of $5.0 million notes issued in
January 1998.

         Preferred Stock Dividend and Accretion. For the year ended December 31,
1999, we paid $0.5 million in preferred stock dividends, related to our Series B
preferred stock. The Series B preferred stock was issued in November 1998 and
was redeemed in full in May 1999.

                                       17
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<PAGE>


         Net Income/(Loss) Applicable to Common Stockholders. Net income
applicable to common stockholders was $152.1 million, or $3.07 per basic share
and $2.51 per diluted share, for the year ended December 31, 2000, compared to a
net loss of $235.4 million, or $6.11 per basic per basic and diluted share, for
the year ended December 31, 1999. The difference was principally the result of
significant non-cash compensation expense recorded in 1999 and a reduction in
this expense recorded in 2000.

Liquidity and Capital Resources

         Since our inception, we have not generated revenues sufficient to fund
our operations, and have incurred operating losses. Through December 31, 2001,
we had an accumulated deficit of $263.1 million. Our cash position (including
short-term investments) on December 31, 2001 was $77.9 million, compared with
$122.5 million on December 31, 2000.

         Net Cash Used In Operating Activities. During the year ended December
31, 2001, we used cash of $30.4 million for operations, compared with $25.9
million for the year ended December 31, 2000. The increase in net cash used by
operating activities relates principally to increased working capital uses.

          Net Cash Used In Investing Activities. For the year ended December 31,
2001, we used cash for investing activities of $26.0 million, compared with
$17.1 million, for year ended December 31, 2000. The increase in cash used in
investing activities was due principally to a $9.0 million investment in
short-term securities in 2001, compared to no investment in such securities
during 2000. In addition, we increased our investment in patents, software
development and strategic investments, which was offset by a decrease in
purchases of property and equipment.

         Net Cash Provided By Financing Activities. We have and continue to fund
our cash requirements from the net proceeds of a public, follow-on offering
completed on February 3, 2000. Through a group of underwriters, we sold a total
of 4.6 million common shares, resulting in net proceeds of $129.7 million. On
March 27, 2000, Liberty Digital, Inc. invested an additional $20 million in us
by exercising a warrant granted in March 1999. For the year ended December 31,
2000, OpenTV invested $10 million in our Digital ADCO subsidiary, and Motorola
invested $3.0 million and $2.0 million in the years ended December 31, 2000 and
1999, respectively, in Digital ADCO.

Critical Accounting Policies

         ACTV and Liberty Livewire LLC, a unit of Liberty Livewire Corporation
("Livewire"), in April 2000 entered into a joint marketing arrangement to market
"HyperTV with Livewire." Livewire received various rights to use certain
patented ACTV technologies in providing turnkey convergence services, including
application hosting, web authoring services, data management, e-commerce and
other value-added services for advertisers, television programmers, studios and
networks.

         In connection with granting these licensed rights to Livewire, we
received a warrant to acquire 2,500,000 shares of Livewire common stock at
an exercise price of $30 per share. The warrant, which expires in June 2015
and includes registration rights, is exercisable ratably over five years,
beginning April 13, 2001. With certain exceptions, the warrant is not
transferable. The warrants are non-forfeitable and fully vested (as the
term "vesting" is used by the Financial Accounting Standards Board in its
EITF 00-8: Accounting by a Grantee for an Equity Instrument to Be Received
in Conjunction with Providing Goods or Services). We recorded an investment
and deferred revenue in the amount of approximately $76.0 million, the
estimated value of the warrant (using the Black-Scholes pricing model) at
the time the agreement was executed. Beginning January 1, 2001 changes in
fair value in the investment in warrant are recorded to the statement of
operations as we adopted SFAS No. 133. We expect the value of the warrant
to fluctuate based on the underlying stock price of Livewire. We do not
currently expect to exercise or register shares in the coming year. The
deferred revenue we record is being amortized into revenue over a period of
21 years, the contractual term of the joint marketing arrangement.

         The cost of patents which represent patent acquisition costs and
legal costs relating to patents pending, is being amortized on a
straight-line basis over the estimated economic lives of the respective
patents (averaging 10 years), which is less than the statutory life of each
patent.

         We capitalize costs incurred for the development of software products
when economic and technological feasibility of such products has been
established. Capitalized software costs are amortized on a straight-line basis
over the estimated useful lives of the respective products

         We recorded a charge or a credit to stock-based compensation expense
for increases or decreases, in the market value of the our common stock in
excess of the exercise price of certain employee options, which were subject to
variable option accounting treatment. We recorded a credit in stock-based
compensation for the year ended December 31, 2001 as the market price of our
common stock declined in 2001 as compared to its value as of December 31, 2000.
We recorded a credit in stock-based compensation for the year ended December 31,
2000 as the market price of our common stock declined in 2000 as compared to its
value as of December 31, 1999.

         We currently evaluate the realizability of goodwill based upon the
expected undiscounted cash flows of the acquired business, which may change
after we adopt SFAS No. 142.

         Beginning January 1, 2001, we account for our investment in restricted
warrants for Liberty Livewire Corporation under SFAS 133 which requires us to
record changes in the fair value of this investment in the statement of
operations.

         The preparation of financial statements in conformity with generally
accepted accounting principles requires us to make estimates and assumptions
that affect the reported amount of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Our
actual results could differ from these estimates.

                                       18
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<PAGE>

Impact of Inflation

         Inflation has not had any significant effect on the our operating
costs.

New Accounting Pronouncements

         Statement of Financial Accounting Standards ("SFAS") No. 133
"Accounting for Derivative Instruments and Hedging Activities" is effective for
all fiscal years beginning after June 15, 2000. SFAS 133 as amended, establishes
accounting and reporting standards for derivative instruments. Under SFAS 133,
certain contracts that were not formerly considered derivatives may now meet the
definition of a derivative. We have adopted SFAS 133 as of January 1, 2001.
ACTV's investment in warrants of Livewire, a publicly traded company, was
accounted for at fair value, resulting in a non-cash, cumulative effect of a
change in accounting principle of approximately $58.7 million in 2001. This
investment will be marked to market prospectively on a quarterly basis and such
changes in the fair value of the Livewire investment will be recorded in the
results of our operations, which may cause volatility in earnings in future
years.

         The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 141, Business Combinations, ("SFAS 141"),
which is effective for business combinations initiated after June 30, 2001,
established accounting and reporting for business combinations by requiring that
all business combinations be accounted for under the purchase method. Use of the
pooling-of-interests method is no longer permitted. SFAS 141 also provides
guidance on purchase accounting related to the recognition of intangible assets
and accounting for negative goodwill. The Company will adopt SFAS 141 for any
future business combinations that are consummated.

         In June 2001, the FASB issued Statement of Financial Accounting
Standards No. 142 ("SFAS 142"), Goodwill and Other Intangible Assets, effective
for fiscal years beginning after December 15, 2001. Under SFAS 142, goodwill and
intangible assets deemed to have indefinite lives will no longer be amortized
but will be subject to annual impairment tests. Other intangible assets will
continue to be amortized over their useful lives. The Corporation will apply the
provisions of SFAS 142 beginning on January 1, 2002. Application of the
non-amortization provisions of SFAS 142 would have been expected to result in an
decrease in unaudited pro forma net loss before extraordinary items of
approximately $3.6 million per year had the provisions of the new standards been
applied during 2001. During 2002, the Company will perform the required
impairment tests of goodwill using the methodology prescribed by SFAS 142. The
Company is required to adopt SFAS 142 as of the beginning of 2002. The Company
has not yet determined the final expected effect the adoption of SFAS 142 will
have on its statement of financial condition, but does not believe it will be
material.

         As of August 2001, the FASB issued Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), Accounting for Obligations Associated with the
Retirement of Long-Lived Assets ("SFAS 143"), which is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The objective
of SFAS 143 is to provide accounting guidance for legal obligations associated
with retirement of long-lived assets. The retirement obligations included within
the scope of this pronouncement are those that an entity cannot avoid as a
result of the acquisition, construction or normal operation of a long-lived
asset. Components of larger systems also fall under this pronouncement, as well
as tangible long-lived assets with indeterminable lives. The Company does not
believe that that the adoption of SFAS 143 will impact the Company's financial
condition, cash flows and results of operations. The Company plans to adopt SFAS
143 during the first quarter of 2003.

         In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144,

                                       19
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<PAGE>


Accounting for the Impairment or Disposal of Long-Lived Assets, ("SFAS 144"),
which is effective for financial statements issued for fiscal years beginning
after December 15, 2001. The objectives of SFAS 144 are to address significant
issues relating to the implementation of Statement of Financial Accounting
Standards No. 121, ("SFAS 121"), Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and to develop a single
accounting model, based on the framework established in SFAS 121, for long-lived
assets to be disposed of by sale, whether previously held and used or newly
acquired. The Company has not yet assessed if the adoption of SFAS 144 will have
an impact on the Company's financial condition and results of operations. The
Company will adopt SFAS 144 during the first quarter of 2002.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         The Company's interest income is affected by changes in the general
level of U.S. interest rates. Changes in U.S. interest rates could affect the
interest earned on the Company's cash equivalents and investments. Currently,
changes in U.S. interest rates would not have a material effect on the interest
earned on the Company's cash equivalents and investments. A majority of these
cash equivalents and investments earn a fixed rate of interest while the
remaining portion earns interest at a variable rate. The Company does not
anticipate that exposure to interest rate market risk will have a material
impact on the Company due to the nature of the Company's investments.

         During April 2000, the Company received a warrant to acquire
2,500,000 shares of Liberty Livewire Corporation ("Livewire"), a publicly
traded company. The warrant becomes exercisable at the rate of 500,000
shares per year, commencing on April 13, 2001, includes certain
registration rights and may be exercised until March 31, 2015. The warrants
are non-forfeitable and fully vested (as the term "vesting" is used by the
Financial Accounting Standards Board in its EITF 00-8: Accounting by a
Grantee for an Equity Instrument to Be Received in Conjunction with
Providing Goods or Services). The warrant is not transferable, except in
certain circumstances. The Company estimated the value of the warrant to be
$76,016,175 at the date it was received, using the Black-Scholes pricing
model, with a risk free rate of 6.5%, a volatility of 80% and assuming no
cash dividends. The estimated value of the warrant at December 31, 2000 was
$17.3 million, using the same assumptions. Beginning January 1, 2001,
changes in fair value in the investment in warrant are recorded to the
statement of operations as the Company adopted SFAS No. 133. The estimated
fair value of the warrant at December 31, 2001 was $16.3 million. The
Company expects the value of the warrant to fluctuate based on the
underlying stock price of Livewire. The Company does not currently expect
to exercise or register shares in the coming year.

         The Company recorded stock-based compensation expense based on
increases and decreases in the market price of the Company's common stock above
the exercise price of certain employee options, which were subject to variable
option accounting treatment. To the extent that the Company had a stock-based
compensation obligation at the beginning of a given reporting period, the
Company recognized a reduction in stock-based compensation expense related to
unexercised variable options for that period based on a reduction of the market
price for the Company's stock at the end of the period. The obligation would
increase as the market price for the Company's common stock increases at the end
of a reporting period.

Item 8.  Financial Statements and Supplementary Data

         The Financial Statements are listed under Item 14 in this report.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         None.

                                       20
-------------------------------------------------------------------------------
<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

Executive Officers and Directors

         We intend to file with the Securities and Exchange Commission, within
120 days after December 31, 2001, a definitive proxy statement pertaining to our
annual meeting of stockholders to be held in June 2002. Information regarding
our directors and executive officers will appear under the caption "Election of
Directors" in the proxy statement and is incorporated in this report by
reference.

Item 11.  Executive Compensation

         Information regarding executive compensation will appear under the
caption "Executive Compensation" in the proxy statement and is incorporated in
this report by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         Information regarding security ownership of certain beneficial owners
and management will appear under the caption "Ownership of Securities" in the
proxy statement and is incorporated in this report by reference.

Item 13.  Certain Transactions

         Information regarding certain transactions will appear under the
caption "Certain Transactions" in the proxy statement and is incorporated in
this report by reference.

                                     PART IV

Item 14.  Financial Statements, Schedules, Exhibits and Reports on Form 8-K:

         (a)1. FINANCIAL STATEMENTS:

         See the Consolidated Financial Statements beginning on Page F-1
hereafter, which is incorporated by reference.

                                       21
-------------------------------------------------------------------------------


<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of ACTV, Inc.:

         We have audited the accompanying consolidated balance sheets of ACTV,
Inc. and subsidiaries ("the Company") as of December 31, 2001 and 2000 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 2001. Our
audits also included the financial statement schedule listed in the index at
Item 14 (a)(2). These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule based
on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, such consolidated financial statements present fairly,
in all material respects, the consolidated financial position of the Company as
of December 31, 2001 and 2000 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

         As discussed in Note 2 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 133 ("SFAS")
"Accounting for Derivative Instruments and Hedging Activities", as amended by
SFAS 137 and 138, effective on January 1, 2001.

         As discussed in Note 21 to the consolidated financial statements, the
accompanying consolidated balance sheets and consolidated statements of
stockholders' equity have been restated.

DELOITTE & TOUCHE LLP

April 1, 2002
(September 23, 2002 as to the effects of the restatement discussed in Note 21)
New York, New York



                                       F-1
-------------------------------------------------------------------------------


<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             CONSOLIDATED BALANCE SHEETS (AS RESTATED - SEE NOTE 21)

<TABLE>
<CAPTION>

                                                                                          December 31,
                                                                                 --------------------------------
                                                                                      2001             2000
                                                                                 ---------------  ---------------
<S>                                                                              <C>              <C>
ASSETS
Current assets:
Cash and cash equivalents                                                        $   69,035,707   $  122,488,041
Short-term investments                                                                8,951,695               --
Accounts receivable-- net                                                             1,319,805        1,182,376
Other                                                                                 1,696,617        3,758,935
                                                                                 ---------------  ---------------
     Total current assets                                                            81,003,824      127,429,352
                                                                                 ---------------  ---------------

Property and equipment-net                                                            6,344,631       12,628,232
                                                                                 ---------------  ---------------

Other assets:
Restricted cash                                                                         484,913        3,165,368
Investment in warrant                                                                16,255,355       76,016,175
Investments-other                                                                     7,397,776        3,250,000
Patents and patents pending                                                           8,425,889        8,053,642
Software development costs                                                            5,310,100        3,328,101
Goodwill                                                                             12,935,701        1,362,072
Other                                                                                 1,429,132          275,638
                                                                                 ---------------  ---------------
     Total other assets                                                              52,238,866       95,450,996
                                                                                 ---------------  ---------------

        Total                                                                    $  139,587,321   $  235,508,580
                                                                                 ===============  ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses                                            $    5,664,088   $    7,712,857
Deferred revenue                                                                      4,068,450        4,032,776
                                                                                 ---------------  ---------------

Total current liabilities                                                             9,732,538       11,745,633

Deferred revenue                                                                     66,966,638       70,586,450
Minority interest                                                                     3,215,652        6,422,129
Stockholders' equity:
Common stock, $0.10 par value, 200,000,000 shares authorized: issued and
   outstanding 55,881,938 at December 31, 2001, 51,228,154 at December 31, 2000       5,588,194        5,122,816
Notes receivable from stock sales                                                      (339,035)        (643,606)
Additional paid-in capital                                                          317,496,700      303,958,715
Accumulated deficit                                                                (263,073,366)    (161,683,557)
                                                                                 ---------------  ---------------

     Total stockholders' equity                                                      59,672,493      146,754,368
                                                                                 ---------------  ---------------

        Total liabilities and stockholders' equity                               $  139,587,321   $  235,508,580
                                                                                 ===============  ===============

</TABLE>

                 See notes to consolidated financial statements

                                       F-2
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                            Years ended December 31,
                                                                --------------------------------------------------
                                                                     2001             2000             1999
                                                                ---------------  ---------------- ----------------
<S>                                                             <C>              <C>              <C>
Revenue                                                         $   13,688,615   $     8,016,453  $     2,909,642

Costs and expenses:
Selling, general and administrative                                 46,580,939        45,714,082       24,794,126
Depreciation and amortization                                        5,865,671         3,481,259        1,691,724
Amortization of goodwill                                             3,567,955           426,372          426,372
Loss on write-down of goodwill                                      11,247,725                --               --
Restructuring charge                                                 6,591,223                --               --
Stock appreciation rights                                                   --                --        1,950,330
Stock-based compensation (income)/expense                          (12,148,504)     (186,673,365)     208,343,386
                                                                ---------------  ---------------- ----------------
     Total costs and expenses                                       61,705,009      (137,051,652)     237,205,938
                                                                ---------------  ---------------- ----------------

(Loss)/income from operations                                      (48,016,394)      145,068,105     (234,296,296)
                                                                ---------------  ---------------- ----------------

Interest income                                                      4,180,923         7,726,929          465,840
Interest expense                                                            --          (284,619)      (1,044,227)
                                                                ---------------  ---------------- ----------------
Interest-net                                                         4,180,923         7,442,310         (578,387)
                                                                ---------------  ---------------- ----------------

Other expense                                                       (2,028,623)         (750,000)              --
                                                                ---------------  ---------------- ----------------

(Loss)/income before minority interest, preferred stock
   dividends and accretion, extraordinary item and cumulative
   effect of accounting change                                     (45,864,094)      151,760,415     (234,874,683)

Minority interest-subsidiary                                         3,206,482         1,743,357             (588)
                                                                ---------------  ---------------- ----------------

(Loss)/income before preferred stock dividends and accretion,
   extraordinary item and cumulative effect of accounting
   change                                                          (42,657,612)      153,503,772     (234,875,271)

Extraordinary loss on early extinguishment of debt                          --        (1,411,139)              --

Cumulative transition effect of adopting SFAS No. 133              (58,732,197)               --               --
                                                                ---------------  ---------------- ----------------

(Loss)/income before preferred stock dividends and accretion      (101,389,809)      152,092,633     (234,875,271)

Preferred stock dividends and accretion                                     --                --         (494,431)
                                                                ---------------  ---------------- ----------------

Net (loss)/income applicable to common stockholders             $ (101,389,809)  $   152,092,633  $  (235,369,702)

(Loss)/income per share

Basic
Before extraordinary item and cumulative effect of accounting
   change                                                       $        (0.77)  $          3.10  $         (6.11)
Extraordinary item                                                          --             (0.03)              --
Cumulative effect of accounting change                                   (1.07)               --               --
                                                                ---------------  ---------------- ----------------
Basic net (loss)/income per share applicable to common
   stockholders                                                 $        (1.84)  $          3.07  $         (6.11)
                                                                ===============  ================ ================

Diluted
Before extraordinary item and cumulative effect of accounting
   change                                                       $        (0.77)  $          2.53  $         (6.11)
Extraordinary item                                                          --             (0.02)              --
Cumulative effect of accounting change                                   (1.07)               --               --
                                                                ---------------  ---------------- ----------------
Diluted net (loss)/income per share applicable to common        $        (1.84)  $          2.51  $         (6.11)
   stockholders

Shares used in basic calculations                                   55,014,772        49,501,885       38,491,044
                                                                ===============  ================ ================

Shares used in diluted calculations                                 55,014,772        60,719,648       38,491,044
                                                                ===============  ================ ================
</TABLE>


                 See notes to consolidated financial statements

                                       F-3
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                          Years ended December 31,
                                                            -----------------------------------------------------
                                                                  2001              2000              1999
                                                            ----------------- -----------------  ----------------
<S>                                                         <C>               <C>                <C>
Cash flows from operating activities:
Net (loss)/income:                                          $   (101,389,809) $    152,092,633   $  (234,875,271)

Adjustments to reconcile net (loss)/income to net cash
   used in operations:
   Cumulative effect of adopting SFAS No. 133                     58,732,197                --                --
   Change in fair value of warrant                                 1,028,623                --                --
   Depreciation and amortization                                   9,433,626         3,907,631         2,118,096
   Stock-based compensation                                      (12,148,504)     (186,673,365)      208,343,386
   Deferred compensation-- other                                      75,000           306,000         1,950,330
   Amortization of deferred expenses related to debt
     financing                                                            --                --           864,147
   Amortization of deferred revenue                               (3,619,812)       (1,809,907)               --
   Write-down of investment                                        1,000,000           750,000                --
   Common stock issued in lieu of cash payment                     1,767,275         4,560,000         6,383,560
   Non-cash portion of restructuring charge                       10,601,674                --                --
   Write-down of goodwill                                         11,247,725                --                --
   Minority interest                                              (3,206,482)       (1,743,357)              588
Changes in assets and liabilities:
   Accounts receivable                                               968,978           286,788          (933,501)
   Other assets                                                   (2,168,111)       (2,798,883)         (615,789)
   Accounts payable and accrued expenses                          (2,739,242)        5,745,693           537,249
   Deferred revenue                                                   35,674          (485,032)          825,788
                                                            ----------------- -----------------  ----------------
        Net cash used in operating activities                    (30,381,188)      (25,861,799)      (15,401,417)
Cash flows from investing activities:
   Investment in short-term investments                           (8,951,695)               --                --
   Investments in patents                                         (1,005,380)         (500,726)       (7,515,343)
   Purchases of property and equipment                            (8,005,909)      (10,938,456)       (2,366,917)
   Investment in software development costs                       (2,776,001)       (1,954,979)       (1,438,654)
   Strategic investments                                          (5,266,239)       (3,750,000)               --
                                                            ----------------- -----------------  ----------------
        Net cash used in investing activities                    (26,005,224)      (17,144,161)      (11,320,914)
Cash flows from financing activities:
   (Receipt) payment of letters of credit                          2,680,455        (3,165,368)               --
   Retirement of debt--net                                                --        (4,567,095)         (174,732)
   Redemption of preferred stock                                          --                --        (5,198,342)
   Net proceeds from subsidiary equity transactions                       --        13,049,895         2,000,593
   Net proceeds from equity financing                                143,625       150,763,399        34,309,731
   Repayment of stockholders loan                                    109,998                --                --
                                                            ----------------- -----------------  ----------------
        Net cash provided by financing activities                  2,934,078       156,080,831        30,937,250
                                                            ----------------- -----------------  ----------------
Net (decrease) increase in cash and cash equivalents             (53,452,334)      113,074,871         4,214,919
   Cash and cash equivalents, beginning of period                122,488,041         9,413,170         5,198,251
                                                            ----------------- -----------------  ----------------
   Cash and cash equivalents, end of period                 $     69,035,707  $    122,488,041   $     9,413,170
                                                            ================= =================  ================

Supplemental Disclosure to the Consolidated Statements of      For the Year
Cash Flows                                                         Ended
                                                             December 31, 2001
                                                             ------------------
Retirement of common stock                                          $1,714,123
Purchase Acquisitions:
   Assets acquired (excluding cash)                                  1,948,392
   Liabilities assumed                                               2,744,148
   Market value of shares issued                                    27,475,090

</TABLE>

                 See notes to consolidated financial statements

                                       F-4
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (AS RESTATED - SEE NOTE 21)

<TABLE>
<CAPTION>


                                                                             Preferred              Preferred
                                                   Common Stock               Series A               Series B
                                              -----------------------    -------------------    ---------------------

                                                                                                Shares                 Stockholder
                                                Shares       Amount      Shares      Amount       $          Amount       Loan
                                              ----------   ----------    -------     -------    ------     -----------  ----------
<S>                                           <C>          <C>           <C>         <C>        <C>        <C>          <C>

Balance at December 31, 1998                  30,031,494   $3,003,151     56,300     $ 5,630     5,018     $ 2,805,961  $(199,900)
                                              ===========  ===========   ========    ========   =======    ============ ==========

Minority interest adjustment
Issuance of common shares in connection
     with financing                            4,059,783      405,978
Issuance of shares for services provided         931,294       93,129
Issuance of shares in connection with
     exchange of preferred stock               1,061,690      106,169    (56,300)     (5,630)
Issuance of shares in connection with
     exercise of stock options, stock
     appreciation rights and warrants          6,304,573      630,457
Adjustment to deferred stock compensation
Issuance of common stock for 401(k) plan          51,198        5,120
Preferred stock redemption                                                                      (5,018)     (2,805,961)
Repayment of stockholder loans                                                                                            199,900
Issuance of stockholder loans                                                                                            (456,016)
Net loss
Preferred stock dividends and accretion
                                              -----------  -----------   --------    --------   -------    ------------ ----------
Balances December 31, 1999                    42,440,032   $4,244,004         --     $    --        --     $        --  $(456,016)
                                              ===========  ===========   ========    ========   =======    ============ ==========
Minority interest adjustment

Issuance of shares in connection with
     public offering                           4,600,000      460,000
Issuance of shares for services                  947,000       94,700
Issuance of shares in connection with
     exercise of stock options & warrants      3,292,089      329,209
Adjustment to deferred stock compensation
Issuance of common stock for 401(k) plan           7,509          751
Issuance of stockholder loans                                                                                            (187,590)
Retirement of common stock                       (58,476)      (5,848)
Net income
                                              -----------  -----------   --------    --------   -------    ------------ ----------
Balance at December 31, 2000                  51,228,154   $5,122,816         --     $    --        --     $        --  $(643,606)
                                              ===========  ===========   ========    ========   =======    ============ ==========

Issuance of shares in connection with
     exercise of stock options & warrants      1,281,164      128,116

Adjustment to deferred stock compensation
Issuance of common stock for 401(k) plan          92,960        9,296
Issuance of shares in connection with
     acquisition                               4,007,889      400,789
Rescission and repayment of stockholder
     loans                                                                                                                304,571
Retirement of common stock                      (728,229)     (72,823)
Net loss
                                              -----------  -----------   --------    --------   -------    ------------ ----------
Balance at December 31, 2001                  55,881,938   $5,588,194         --     $    --        --     $        --  $(339,035)
                                              ===========  ===========   ========    ========   =======    ============ ==========

<PAGE>

<CAPTION>

                                                 Additional
                                                  Paid-in-
                                                  Capital         Deficit          Total
                                                ------------    --------------  ---------------
<S>                                             <C>             <C>             <C>

Balance at December 31, 1998                    $  74,514,275   $  (75,693,834)  $   4,435,283
                                                ==============  ==============  ===============

Minority interest adjustment                        1,020,003                        1,020,003
Issuance of common shares in connection
     with financing                                22,611,560                       23,017,538
Issuance of shares for services provided           10,696,587                       10,789,716
Issuance of shares in connection with
     exchange of preferred stock                                                       100,539
Issuance of shares in connection with
     exercise of stock options, stock
     appreciation rights and warrants              12,689,367                       13,319,824
Adjustment to deferred stock compensation         208,343,386                      208,343,386
Issuance of common stock for 401(k) plan              127,042                          132,162
Preferred stock redemption                         (2,392,380)                      (5,198,341)
Repayment of stockholder loans                                                         199,900
Issuance of stockholder loans                                                         (456,016)
Net loss                                                         (234,875,271)    (234,875,271)
Preferred stock dividends and accretion                              (494,431)        (494,431)
                                                --------------  ---------------  ---------------
Balances December 31, 1999                      $ 327,609,840   $ (311,063,536)  $   20,334,292
                                                ==============  ==============  ===============
Minority interest adjustment                        5,864,999                        5,864,999

Issuance of shares in connection with
     public offering                              128,909,468                      129,369,468
Issuance of shares for services                     7,617,788                        7,712,488
Issuance of shares in connection with
     exercise of stock options & warrants          20,783,812                       21,113,021
Adjustment to deferred stock compensation        (186,673,365)                    (186,673,365)
Issuance of common stock for 401(k) plan              153,809                          154,560
Issuance of stockholder loans                                                         (187,590)
Retirement of common stock                           (307,636)     (2,712,654)      (3,026,138)
Net income                                                        152,092,633      152,092,633
                                                --------------  ---------------  ---------------
Balance at December 31, 2000                    $ 303,958,715   $ (161,683,557)  $  146,754,368
                                                ==============  ===============  ===============

Issuance of shares in connection with
     exercise of stock options & warrants              15,509                          143,625

Adjustment to deferred stock compensation         (12,148,504)                     (12,148,504)
Issuance of common stock for 401(k) plan              237,979                          247,275
Issuance of shares in connection with
     acquisition                                   27,074,301                       27,475,090
Rescission and repayment of stockholder
     loans                                                                             304,571
Retirement of common stock                         (1,641,300)                      (1,714,123)
Net loss                                                         (101,389,809)    (101,389,809)
                                                --------------  ---------------  ---------------
Balance at December 31, 2001                    $ 317,496,700   $ (263,073,366)  $   59,672,493
                                                ==============  ===============  ===============

</TABLE>

                 See notes to consolidated financial statements

                                       F-5
-------------------------------------------------------------------------------
<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
                  Years Ended December 31, 2001, 2000, and 1999

1. Nature of Operations

         We are a digital media company that provides proprietary technologies,
tools, and technical and creative services for interactive TV advertising,
programming, and enhanced media applications. We have two operating business
segments, which we call Digital TV and Enhanced Media.

         We believe that our Digital TV technologies are unique in providing
targeting, interactivity and accountability for television commercials, and in
giving viewers the ability to instantly customize their viewing experiences for
a wide variety of programming applications. Our Enhanced Media technologies
allow both for the enhancement of video and audio content, including standard TV
programming, with Web-based information and interactivity.

2. Organization and Significant Accounting Policies

         Principles of Consolidation--The Company's consolidated financial
statements include the balances of its operating subsidiaries that are more than
50% owned and controlled along with Digital ADCO ("ADCO"), which is a 45.9%
subsidiary controlled by the Company. All significant intercompany transactions
and account balances are eliminated.

         Property and Equipment--Property and equipment is recorded at cost and
depreciated on the straight-line method over its estimated useful lives
(generally 3 to 5 years). Depreciation expense for the years ended December 31,
2001, 2000, and 1999 aggregated $4,309,285, $2,080,420, and $929,765,
respectively.

         Patents and Patents Pending--The cost of patents, representing patent
acquisition costs and legal costs relating to patents pending, is being
amortized on a straight-line basis over the estimated economic lives of the
respective patents (averaging 10 years), which is less than the statutory life
of each patent. The balances at December 31, 2001 and 2000, are net of
accumulated amortization of $1,607,268 and $981,248, respectively.

         Software Development Costs--The Company capitalizes costs incurred for
the development of software products when economic and technological feasibility
of such products has been established. Capitalized software costs are amortized
on a straight-line basis over the estimated useful lives of the respective
products (3 years). The unamortized balance at December 31, 2001 and 2000 is net
of accumulated amortization of $2,254,842 and $1,567,435, respectively.

         Cash Equivalents and Short-Term Investments--The Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents. Commercial paper investments with a
maturity greater than three months, but less than one year, at the time of
purchase are considered to be short-term investments. The carrying amount of the
investments approximates fair value due to their short maturity.

         Revenue Recognition--In businesses where the Company is delivering
specific services and products, revenue is recognized from sales when a product
is shipped and when services are performed.

         Revenue and anticipated profits under long-term contracts are recorded
on a percentage-of-completion basis, generally using the cost-to-cost method of
accounting where sales and profits are recorded based on the ratio of costs
incurred to estimated total costs at completion.

         The Company recognizes the revenue allocable to indefinite software
licenses upon delivery and installation of the software product, unless the fee
is not fixed or determinable or collectibility is not probable. If the fee is
not fixed or determinable, revenue is recognized as payments become due from the
customer. If collectibility is not considered probable, revenue is recognized
when the fee is collected.

         Arrangements that include software services, such as training or
installation, are evaluated to determine whether those services are essential to
the functionality of other elements of the arrangement. When software services
are considered essential, revenue under the entire arrangement is recognized as
the services are performed using the percentage-of-completion contract
accounting method. When software services are not considered essential, the fee
allocable to the service element is recognized as revenue as the services are
performed.

         Where software licenses are granted for a specific period of time, with
related content and maintenance contracts, revenue is aggregated and amortized
on a straight-line basis over the life of the license.

         The Company and Liberty Livewire LLC, a unit of Liberty Livewire
Corporation ("Livewire"), in April 2000 entered into a joint marketing
arrangement to market "HyperTV with Livewire." Livewire received various rights
to use certain patented ACTV technologies in providing turnkey convergence
services, including application hosting, web authoring services, data
management, e-commerce and other value-added services for advertisers,
television programmers, studios and networks.

         In connection with granting these licensed rights to Livewire, the
Company received a warrant to acquire 2,500,000 shares of Livewire common
stock at an exercise price of $30 per share. The warrant, which expires in
June 2015 and includes registration rights, is exercisable ratably over
five years, beginning April 13, 2001. With certain exceptions, the warrant
is not transferable. The warrants are non-forfeitable and fully vested (as
the term "vesting" is used by the Financial Accounting Standards Board in
its EITF 00-8: Accounting by a Grantee for an Equity Instrument to Be
Received in Conjunction with Providing Goods or Services). The Company
recorded an investment and deferred revenue in the amount of approximately
$76.0 million, the estimated value of the warrant (using the Black-Scholes
pricing model) at the time the agreement was executed. Beginning January 1,
2001 changes in fair value in the investment in warrant are recorded to the
statement of operations as the Company adopted SFAS No. 133. The Company
expects the value of the warrant to fluctuate based on the underlying stock
price of Livewire. The Company does not currently expect to exercise or
register shares in the coming year. The deferred revenue recorded by the
Company is being amortized into revenue over a period of 21 years, the
contractual term of the joint marketing arrangement.

         Deferred revenue results primarily from the Livewire joint marketing
arrangement and from payments received from certain customers in advance of
revenue being earned under software licensing, software installation, support
and maintenance contracts.

         Accounts Receivable--Customer accounts receivable include an amount for
one customer representing 33% of the Company's balance in 2001, and one customer
representing 32% of the Company's balance in 2000. The allowance for
uncollectable accounts totaled $185,337 and $20,000 at December 31, 2001 and
2000, respectively.

         Minority Interest-- We record minority interest related to Digital
ADCO, in which our ownership interest was 45.9% at December 31, 2001. Digital
ADCO was formed in November 1999 and co-founded by ACTV, Inc. and Motorola
Broadband. Digital ADCO develops and markets applications for the delivery of
addressable advertising. We account for issuances of our subsidiaries stock as
capital transactions. No gain or loss has been recorded in the statements of
operations in connection with any sales of subsidiary stock. We have no plans to
repurchase the subsidiary shares in the near term, as we believe these to be
strategic investments made by the counterparties in the transactions (see Note
18).

                                       F-6
-------------------------------------------------------------------------------
<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

         Financial Instruments-- Effective January 1, 2001, ACTV adopted
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires that all
derivative financial instruments be recorded in the balance sheet at fair value.
The provisions of SFAS 133 affected the Company's accounting for its investment
of 2.5 million restricted warrants for Liberty Livewire Corporation
("Livewire"). Prior to the adoption of SFAS 133, these warrants were carried at
cost. With the adoption of SFAS 133, the Livewire investment is recorded at fair
value. This resulted in the Company recording a cumulative effect transition
adjustment loss of $58.7 million at January 1, 2001. Beginning in the first
quarter of 2001, the Company records subsequent changes in the fair value of
this investment in the statement of operations.

         There may be periods with significant non-cash increases or decreases
to the Company's net income/(loss) pertaining to the Livewire investment. The
carrying value of the Company's derivative instrument approximates fair value.
The fair value of the Livewire investment is determined by reference to
underlying market values resulting from trading of Livewire's common stock on a
national securities exchange and on estimates using the Black-Scholes valuation
model.

         Earnings Per Share--Basic income (loss) per common share equals net
income (loss) divided by the weighted average number of shares of the Company's
common stock outstanding during the period. Diluted income per share gives
effect to the potential dilution of outstanding stock options for the year ended
December 31, 2000. The Company did not consider the effect of stock options or
convertible preferred stock upon the calculation of the loss per common share
for the years ended December 31, 2001 and 1999, respectively, as it would be
anti-dilutive.

         Long-Lived Assets and Intangibles--In accordance with SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, which requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the book value of the
asset may not be recoverable, the Company reviews the carrying values of its
long-lived assets and identifiable intangibles for possible impairment.

         Goodwill--The excess of the purchase cost over the fair value of net
assets acquired in an acquisition (goodwill) is being amortized on a
straight-line basis over a period of 7-10 years. At December 31, 2001 and 2000,
goodwill amounted to $12.9 and $1.4 million, net of accumulated amortization of
$6.5 and $2.9 million, respectively. Amortization of goodwill totaled $3.6,
$0.4, and $0.4 million in 2001, 2000, and 1999, respectively. The Company
evaluates the realizability of goodwill based upon the expected undiscounted
cash flows of the acquired business. Intellocity's inability to achieve the
operating results specified in its 2001 budget (it operated at a loss for fiscal
2001) triggered an impairment review of its long-lived assets in the fourth
quarter. We developed a revised operating plan to restructure and stabilize the
business. The revised projections by service line provided the basis for
measurement of the asset impairment charge. We calculated the present value of
expected future cash flows of Intellocity's service lines to determine the fair
value of the assets. Accordingly, in the fourth quarter of 2001, we recorded an
impairment charge of $11.2 million. Future impairments, if any, will be
recognized through a charge to operations, in the period in which the impairment
is deemed to exist.

         Fair Value of Financial Instruments --The carrying amounts of cash and
cash equivalents, receivables, accounts payable, and accrued liabilities
approximate fair value because of the short maturity of

                                       F-7
-------------------------------------------------------------------------------
<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

these instruments. The carrying amounts of long-term receivables approximates
fair value as the effective rates for these instruments are comparable to market
rates at year-end. The carrying amount of investments approximates fair market
value.

         Stock--Based Compensation--The Company applies the intrinsic-value
based method of accounting prescribed by Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employee", ("APB 25") and presents disclosure
of pro forma information required under Statement of Financial Accounting
Standards No. 123 ("SFAS 123), Accounting for Stock Based Compensation. Certain
of the Company's options are subject to variable plan accounting under APB 25
which results in the recording of charges or credits to compensation expense for
increases or decreases in the market value of the stock in excess of the price
of certain options and an offsetting entry is recorded to additional paid in
capital. The Company amortizes stock based compensation arising from certain
employee stock option grants over the vesting periods of the related options,
generally three years.

         Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.

         Reclassifications--Certain reclassifications have been made to the
prior years financial statements to conform to the current year presentation.

         Recent Accounting Pronouncements--The Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards No. 141,
Business Combinations, ("SFAS 141"), which is effective for business
combinations initiated after June 30, 2001 and established accounting and
reporting for business combinations by requiring that all business combinations
be accounted for under the purchase method. Use of the pooling-of-interests
method is no longer permitted. SFAS 141 also provides guidance on purchase
accounting related to the recognition of intangible assets and accounting for
negative goodwill. The Company will adopt SFAS 141 for any future business
combinations that are consummated.

         In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 142 ("SFAS 142"), Goodwill and Other Intangible Assets, effective
for fiscal years beginning after December 15, 2001. Under SFAS 142, goodwill and
intangible assets deemed to have indefinite lives will no longer be amortized
but will be subject to annual impairment tests. Other intangible assets will
continue to be amortized over their useful lives. The Corporation will apply the
provisions of SFAS 142 beginning on January 1, 2002. Application of the
non-amortization provisions of SFAS 142 would have been expected to result in a
decrease in net loss before extraordinary items of approximately $3.6 million
per year. During 2002, the Company will perform the required impairment tests of
goodwill using the methodology prescribed by SFAS 142. The Company is required
to SFAS 142 as of the beginning of 2002. The Company has not yet determined the
final expected effect the adoption of SFAS 142 will have on its statement of
financial condition, but does not believe it will be material.

         As of August 2001, the FASB issued Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), Accounting for Obligations Associated with the
Retirement of Long-Lived Assets ("SFAS 143"), which is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The objective
of SFAS 143 is to provide accounting guidance for legal obligations associated
with retirement of long-lived assets. The retirement obligations included within
the scope of this pronouncement are those that an entity cannot avoid as a
result of the acquisition, construction or normal operation of a long-lived
asset. Components of larger systems also fall under this pronouncement, as well
as tangible long-lived assets with

                                       F-8
-------------------------------------------------------------------------------
<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

indeterminable lives. The Company does not believe that that the adoption of
SFAS 143 will impact the Company's financial condition, cash flows and results
of operations. The Company plans to adopt SFAS 143 during the first quarter of
2003.

         In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment of Disposal of Long-Lived
Assets, ("SFAS 144"), which is effective for financial statements issued for
fiscal years beginning after December 15, 2001. The objectives of SFAS 144 are
to address significant issues relating to the implementation of Statement of
Financial Accounting Standard No. 121, ("SFAS 121"), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and
to develop a single accounting model, based on the framework established in SFAS
121, for long-lived assets to be disposed of by sale, whether previously held
and used or newly acquired. The Company does not believe that the adoption of
SFAS 144 will have an impact on the Company's financial condition and results of
operations. The Company will adopt SFAS 144 during the first quarter of 2002.

3. Merger and Acquisition Activity

Acquisition

         On March 7, 2001, the Company acquired all of the assets and business
of Intellocity, Inc., ("Intellocity") a technology and engineering solutions
provider focusing on the interactive television market. The Company acquired
Intellocity for 4,007,890 shares of the Company's common stock, aggregating
$23.2 million, and issued options to purchase 762,665 shares of the Company's
common stock valued at $4.3 million, for an aggregate purchase price of $27.5
million. The Company was obligated to make an additional payment of up to 1.5
million shares and options contingent upon Intellocity's achieving certain
performance targets for the year ended December 31, 2001. Intellocity did not
meet those targets. Intellocity shareholders are subject to provisions
restricting the sale of the ACTV stock; these restrictions range over 4 years.
The acquisition was accounted for under the purchase method of accounting in the
first quarter of 2001.

         The fair value of assets acquired and liabilities assumed in the
acquisition of Intellocity amounted to approximately $1.5 million. Goodwill,
representing the excess cost over the fair value of net assets acquired, was
calculated to be $26.4 million and is being amortized over 7 years. As a result
of the Company's year-end review of the realizability of the full goodwill value
attributed to Intellocity, the Company recorded an impairment charge to goodwill
of $11.2 million during the fourth quarter of 2001, adjusting the asset value of
such goodwill from $23.2 million to $12.0 million. The results of Intellocity's
operations are included in the Company's consolidated results from the date of
acquisition.

         On August 17, 2000, the Company acquired all of the outstanding capital
stock of Bottle Rocket, Inc., a business engaged in the creation and marketing
of online, games-based entertainment. The Company acquired Bottle Rocket in
exchange for 272,035 shares of the Company's common stock. The acquisition of
Bottle Rocket has been accounted for under the pooling of interests method of
accounting and, accordingly, the Company's historical consolidated financial
statements have been restated to include the accounts and results of operations
of Bottle Rocket.


                                       F-9
-------------------------------------------------------------------------------

<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

         The following table represents the results of operations on a pro forma
basis, as if the acquisition of Bottle Rocket and Intellocity had been completed
on January 1, 2000. These pro forma results include estimates and assumptions
that management believes are reasonable.

<TABLE>
<CAPTION>


                                                                      For the Year Ended December 31,
                                                                     ---------------------------------
                                                                           2001             2000
                                                                     ----------------  ---------------
<S>                                                                  <C>               <C>
Revenues                                                                 $15,350,452      $16,340,236

(Loss) Income before Minority Interest, Extraordinary Item, and
   Cumulative effect of accounting change                                (46,711,798)     148,642,434

(Loss) Income before Extraordinary Item and Cumulative effect of
   accounting change                                                     (43,505,316)     150,385,791

Net (Loss) Income                                                       (102,237,513)     148,974,652

Basic
(Loss)/income per share before extraordinary item and cumulative
   effect of accounting change                                       $         (0.78)  $         3.04
Extraordinary item                                                                --            (0.03)
Cumulative effect of  accounting change                                        (1.05)              --
                                                                     ----------------  ---------------
Basic (loss)/income per share                                        $         (1.83)  $         3.01
                                                                     ================  ===============

Diluted
(Loss)/income per share before extraordinary item and cumulative
   effect of accounting change                                       $         (0.78)  $         2.48
Extraordinary item                                                                --            (0.03)
Cumulative effect of accounting change                                         (1.05)              --
                                                                     ----------------  ---------------
Diluted (loss)/income per share                                      $         (1.83)  $         2.45
                                                                     ================  ===============
</TABLE>

                                      F-10
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

 4. Property and Equipment

         Property and equipment--net at December 31, 2001 and 2000 consisted of
the following (at cost):

                                                          2001          2000
                                                      ------------  ------------
Machinery and equipment                               $11,981,141   $ 8,138,082
Office furniture and fixtures                           1,023,691     3,253,895
Leasehold improvements                                    868,633     5,992,172
                                                      ------------  ------------
                                                       13,873,465    17,384,149

Less accumulated depreciation and amortization         (7,528,835)   (4,755,917)
                                                      ------------  ------------

                                                      $ 6,344,630   $12,628,232
                                                      ============  ============

5. Financing Activities

Common Stock Financing

         During the years ended December 31, 2001, 2000 and 1999, the Company
raised approximately $0, $129.4 and $23.0 million, respectively, from sales of
common stock to outside investors and $0.1, $21.3 and $13.5 million,
respectively, from the exercise of stock options and warrants.

         On February 3, 2000, we completed a follow-on offering of 4.6 million
common shares, including 0.6 million common shares to cover the over-allotments
of our underwriters, Credit Suisse First Boston, Bear Stearns & Co. Inc., Lehman
Brothers, and Salomon Smith Barney. The 4.6 million total common shares were
priced to the public at $30 per share, for total gross proceeds of $138 million.
We paid underwriting discounts and commissions of $1.80 per share or $8.28
million, resulting in net proceeds of $28.20 per share, or $129.4 million.

         On March 27, 2000 Liberty Digital, Inc. invested an additional $20
million in the Company, increasing its investment to 16% by exercising a warrant
granted in March 1999.

Preferred Stock Financing

         In November 1998, ACTV issued Series B convertible preferred stock
("Series B Stock"), common stock, and warrants to purchase approximately 1.95
million shares of common stock at $2.00 per share as a partial exchange for
approximately 179,000 shares of the subsidiary exchangeable preferred stock. The
excess of the fair value of this consideration over the carrying value of the
exchangeable preferred stock for which the Series B Stock was issued is included
in minority interest subsidiary preferred stock

                                      F-11
-------------------------------------------------------------------------------


<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

dividend and accretion in the accompanying statement of operations. The Series B
Stock was fully redeemable by ACTV at any time at a 10% premium above face value
plus accrued dividends. The holders of the Series B Stock were prohibited from
converting any shares into common stock through November 13, 1999. Beginning
November 13, 1999, the number of shares issued upon conversion was to be
determined by dividing the liquidation value of $1,000 plus accrued dividends by
the conversion price of $2.00 per common share. Beginning February 13, 2000, the
number of shares issued upon conversion was to be determined by dividing the
liquidation value of $1,000 plus accrued dividends by the conversion price of
$1.33 per common share. The beneficial conversion feature related to the
possible conversion of the Series B Stock at $1.33 per share, which equaled
$2,527,723 at the issuance date, was attributed to additional paid-in-capital
and was being accounted for as a charge to net loss applicable to common
stockholders over the period from issuance through February 13, 2000. During May
1999, ACTV redeemed all of the outstanding Series B Stock for a total of
approximately $5.2 million. The Series B Stock had been convertible into common
stock at $2.00 per share beginning in November 1998. ACTV effectively redeemed
the Series B Stock at an equivalent of $2.20 per common stock share, a price
significantly less than the market price at the time of the redemption. The
redemption avoided the possible future issuance of more than 2.8 million shares
of common stock.

Debt Financing

         In January 1998, the Company issued $5.0 million aggregate principal
amount notes. The notes had an interest rate of 13.0% per annum, payable
semi-annually, with principal repayment in one installment on June 30, 2003. The
Company had the option to pay any four semi-annual interest payments in kind
rather than in cash, with an increase in the rate applicable to such payments in
kind to 13.75% per annum. The Company chose to make the first two semi-annual
interest payments (June 30, 1998 and December 31, 1998) in kind. In connection
with the note, the holders received on January 14, 1998 a common stock purchase
warrant (The "Warrant") of Texas Network that granted the holders either the
right to purchase up to 17.5% of the fully-diluted shares of common stock of
Texas Network or, through July 14, 1999, to exchange the Warrant for such number
of shares of the Company's common stock, at the time of and giving effect to
such exchange, that were equal to 5.5% of the fully diluted number of shares of
common stock outstanding.

         For accounting purposes, the Company allocated approximately $1.4
million to the value of the Warrant, based on the market value of the Company's
common stock into which the Warrant was convertible at issuance. The Warrant was
included outside of Consolidated Stockholders' Equity due to its cash put
feature and the notes were recorded at a value of proceeds received less the
value attributed to the Warrant. The difference between the recorded value of
the notes and their principal value was being amortized as additional interest
expense over the life of the notes. The Warrant was exchanged and exercised for
the Company's common stock during the first quarter of 1999.

         On April 3, 2000, the Company repaid certain notes in full, thereby
incurring a loss on extinguishment of debt that was recorded as an extraordinary
item in the quarter ended June 30, 2000. The extraordinary loss includes a
prepayment premium of $369,632, and the unamortized original issue discount and
deferred issue costs of $819,294 and $222,213, respectively, for a total loss of
$1,411,139, or $0.03 per share.

Convertible Preferred Stock

         At December 31, 1999, the Company was authorized to issue 1,000,000
shares of blank check preferred stock, par value $0.10 per share, of which
120,000 shares were designated Series A Convertible Preferred Stock and 6,110
shares were designated

                                      F-12
-------------------------------------------------------------------------------

<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

Series B Stock. There were 86,200 and 56,300 shares of Series A Preferred
outstanding at December 31, 1997 and 1998, respectively. Prior to December 31,
1999, the holders converted all of the outstanding shares of Series A preferred
stock and the Company cancelled the Series A designation. There were 0 and 5,018
shares of Series B Stock issued and outstanding as of December 31, 1997 and
1998, respectively. The Company redeemed all of the Series B Stock in May 1999
and cancelled the Series B Stock designation.

Preferred Stock Rights Agreement

         Our policy is and has been to license our technology and arrange joint
ventures for its use in a number of different industries. In August 2000, our
Board of Directors adopted a Preferred Stock Rights Agreement, which gives our
Board of Directors certain alternative courses of action if a potential acquirer
of 15% or more of our common stock is deemed unlikely to further such policy or
if such potential acquirer is deemed likely to act inconsistently with the best
interests of our stockholders. Pursuant to the Preferred Stock Rights Agreement,
we could distribute certain preferred stock purchase rights to our current
stockholders. These rights would become exercisable if an outside party became
the beneficial owner of 15% or more of our issued and outstanding common stock,
unless our Board of Directors determines to defer the exercise of, or redeem,
such rights. The potential acquirer's rights under the Preferred Stock Rights
Agreement will be null and void. Once exercisable, each preferred stock purchase
right would entitle the holder thereof to purchase .001 of a share of our Series
C Preferred Stock at an exercise price of $0.00001 per share. Each share of our
Series C Preferred Stock shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of our stockholders. Once issued our Board of
Directors could vote to exchange the preferred stock purchase rights for shares
of our common stock. A potential acquirer may be discouraged from completing an
acquisition if it could not be assured of having control of us.

         Our Bylaws provide that only a majority of the Board of Directors or
the Chairman of the Board may call a special meeting of the stockholders. In
addition, our certificate of incorporation permits our Board of Directors to
have us designate and issue, without stockholder approval, preferred stock with
voting, conversion and other rights and preferences that could differentially
and adversely affect the voting power or other rights of the holders of our
common stock. Our issuance of preferred stock or of rights to purchase preferred
stock could also be used to discourage an unsolicited acquisition proposal.

         ACTV Entertainment, Inc. ("Entertainment") and HyperTV Networks, Inc.
are subsidiaries of ACTV, Inc. In part as an anti-takeover defense, in 1997 and
1998 Entertainment and HyperTV granted stock options for their respective Class
B common shares to a limited number of their officers and employees, which Class
B stock options--as amended in December, 1999--were to become exercisable only
upon a "change of control" of ACTV, Inc., as the term "change of control" was
defined in those options. Effective October 2, 2000, all of those Class B stock
options were terminated, with the result that there are no options outstanding
at this date with respect to any of the Class B shares of either Entertainment
or HyperTV.

                                      F-13
-------------------------------------------------------------------------------

<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

6. Stock Options and Warrants

         At December 31, 2001, the Company had reserved shares of Common Stock
for issuance as follows:

<TABLE>
<CAPTION>

                                                                  Granted (net
                                                                       of
                                                   Authorized     cancellations)    Exercised      Outstanding
                                                 ---------------  --------------  --------------- ---------------
<S>                                              <C>              <C>             <C>             <C>
1989 Non-Qualified Stock Option Plan                    100,000          85,000          (82,000)          3,000
1996 Qualified Stock Option Plan                        500,000         493,484         (377,879)        115,605
1998 Qualified Stock Option Plan                        900,000         761,998         (190,995)        571,003
1999 Qualified Stock Option Plan                      1,500,000       1,222,500         (164,047)      1,058,453
2000 Qualified Stock Option Plan                      4,000,000       2,905,116          (30,107)      2,875,009
Options and warrants granted outside of
   formal plans                                                      19,335,215      (10,620,803)      8,714,412
                                                                  --------------  --------------- ---------------

   Total                                                             24,803,313      (11,465,831)     13,337,482
                                                                  --------------  --------------- ---------------

</TABLE>


         During the years 2001, 2000, 1999, 1998, 1996 and 1989 the Board of
Directors approved stock option plans providing for stock option grants to
employees and others who provide significant services to the Company.

         At December 31, 2001, the Company also had outstanding options and
warrants not issued pursuant to a formal plan that were issued to directors,
certain employees, and consultants and pursuant to financing transactions for
the purchase of common stock. The prices of these options and warrants range
from $0.24 to $90.19 per share; they have expiration dates in the years 2001
through 2010. The options and warrants granted are not part of the stock option
plans discussed above.

         As a result of certain cashless exercise features, options totaling 6.9
million outstanding at December 31, 2001, are subject to variable option
accounting treatment. A reduction in deferred stock-based compensation expense
of $12.1 million and $186.7 million related to these variable options was
recorded in the years ended December 31, 2001 and 2000, respectively. Deferred
stock-based compensation expense of $208.3 million related to these options was
recorded for the year ended December 31, 1999. We recorded stock-based
compensation expense in relation to increases in the market price of our common
stock above the exercise price of certain employee options, which were subject
to variable option accounting treatment. To the extent that we had a stock-based
compensation expense liability at the beginning of a given reporting period, we
recognized a reduction in expense related to the unexercised vested variable
options for that period based on a reduction of the market price for our common
stock at the end of the period.

         In the first quarter of 2002, we rescinded the applicable option
exercise provisions that resulted in the variable option accounting treatment in
our financial statements.


                                      F-14
-------------------------------------------------------------------------------


<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

         A summary of the status of the Company's stock options as of December
31, 2001, 2000 and 1999 is as follows:

<TABLE>
<CAPTION>

                                                       2001                     2000                     1999
                                                       Wtd.                     Wtd.                     Wtd.
                                                       Avg.                     Avg.                     Avg.
                                          2001        Exer.        2000        Exer.         1999       Exer.
                                         Shares       Price       Shares       Price        Shares      Price
                                       -----------  ----------- -----------  -----------  ----------- -----------
<S>                                    <C>          <C>         <C>          <C>          <C>         <C>
Outstanding at beginning of period     18,696,202               16,736,838                 7,850,007
Options and warrants granted            2,385,837         1.72   4,698,976   $     8.87   14,863,501  $     8.20
Options and warrants exercised           (404,442)        2.15  (2,622,196)  $     6.74   (5,801,670) $     1.98
Options and warrants
   forfeited/expired                   (7,340,115)       12.31    (117,416)  $    11.75     (175,000) $     4.00
                                       -----------  ----------- -----------  -----------  ----------- -----------

Outstanding at end of period           13,337,482         4.21  18,696,202   $     7.66   16,736,838  $     7.44
                                       -----------  ----------- -----------  -----------  ----------- -----------

Options and warrants exercisable at
   end of period                        7,827,291         3.12  10,061,021   $     8.28    9,369,330  $     9.08

</TABLE>

         The following table summarizes information about stock options
outstanding at December 31, 2001:

<TABLE>
<CAPTION>

                                    Weighted
                                     Number           Average           Weighted                          Weighted
                                   Outstanding       Remaining          Average             Number        Average
                                       at           Contractual         Exercise        Exercisable at    Exercise
Range of Exercise Prices           12/31/2001          Life              Price            12/31/2001       Price
--------------------------------  --------------  ----------------  -----------------  ----------------- -----------
<S>                               <C>             <C>               <C>                <C>               <C>
$ 0.00 to 4.00                        8,413,295         4.0 Years   $           1.56          6,181,596  $     1.44
$ 4.01 to 8.00                        2,687,086         3.6 Years   $           6.83            399,753  $     6.50
$ 8.01 to 12.00                       1,516,000         1.5 Years   $           9.88          1,149,838  $    10.11
$ 12.01 to 16.00                        720,500         2.2 Years   $          13.49             95,503  $    13.50
$ 16.01 to 100.00                           601         3.6 Years   $          81.85                601  $    81.85
                                  --------------                                       -----------------
Total Number Outstanding             13,337,482                                               7,827,291
                                  --------------                                       -----------------

</TABLE>

                                      F-15

-------------------------------------------------------------------------------

<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

         The weighted average exercise price of options granted during 2001,
2000 and 1999 was $1.72, $8.87, and $8.20 per share, respectively, excluding the
value of options granted and terminated within the year. In the case of each
issuance, options were issued at an exercise price that was higher than the fair
market value of the Company's common stock on the date of grant. The Company
applies APB No. 25 and related Interpretations in accounting for its employee
stock option and purchase plans. Had compensation cost for the Company's option
issuances been determined based on the fair value at the grant dates consistent
with the method of FASB Statement 123, the Company's net income (loss) and
income (loss) per basic and diluted share for the years ended December 31, 2001,
2000, and 1999 would have been changed to the pro forma amounts indicated below:


<TABLE>
<CAPTION>
                                                                      2001            2000             1999
                                                                 --------------   -------------   ----------------
Net (loss)/income to common stockholders
<S>                                                              <C>              <C>             <C>
As reported                                                      $(101,389,809)   $152,092,633    $(235,369,702 )
Pro forma                                                        $(103,947,008)   $129,426,485    $(237,772,519 )

Basic
Net (loss)/income per share
As reported
Before extraordinary item                                        $       (0.77)   $       3.10    $     (6.11)
Extraordinary item                                                          --           (0.03)            --
Cumulative effect of accounting change                                   (1.07)             --             --
                                                                 --------------   -------------   ----------------
Basic net (loss)/income per share                                $       (1.84)   $       3.07    $    (6.11)
                                                                 ==============   =============   ================

Pro forma
Before extraordinary item                                        $       (0.82)   $       2.63    $    (6.18)
Extraordinary item                                                          --           (0.03)           --
Cumulative effect of accounting change                                   (1.07)             --            --
                                                                 --------------   -------------   ----------------
Basic net(loss)/income per share                                 $       (1.89)   $       2.60    $    (6.18)
                                                                 ==============   =============   ================

Diluted
Net (loss)/income per share
As reported
Before extraordinary item                                        $       (0.77)   $       2.53    $     (6.11)
Extraordinary item                                                          --           (0.02)            --
Cumulative effect of accounting change                                   (1.07)             --             --
                                                                 --------------   -------------   ----------------
Diluted net (loss)/income per share                              $       (1.84)   $       2.51    $     (6.11)
                                                                 ==============   =============   ================

Pro forma
Before extraordinary item                                        $       (0.82)   $       2.16    $     (6.18)
Extraordinary item                                                          --           (0.02)            --
Cumulative effect of accounting change                                   (1.07)             --             --
                                                                 --------------   -------------   ----------------
Diluted net(loss)/income per share                               $       (1.89)   $       2.14    $     (6.18)
                                                                 ==============   =============   ================
</TABLE>


         The Company estimated the fair value of options issued during 2001,
2000, and 1999 on the date of each grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions: no dividend yield,
expected volatility for 2001, 2000, and 1999 of 128%, 122%, and 94%,
respectively, and a risk free interest rate of 5% for 2001 and 6% for 2000 and
1999.

                                      F-16
-------------------------------------------------------------------------------


<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)


7. Stock Appreciation Rights Plans

         As of December 31, 1998, the Company had granted 896,000 outstanding
Stock Appreciation Rights ("SARs") (with an exercise price of $1.50 per share).
The SARs expired between 2001 and 2006. In May 1999, three directors agreed to
retroactively exercise their vested SARs for unregistered shares of common
stock, based upon the closing market price of $3 15/16 on January 4, 1999. As a
result, the SARs expense for the first quarter of 1999 was approximately $3.2
million less than it would have been otherwise. In September 1999, all remaining
SARs were converted into options that became part of the Company's 1999 Option
Plan. In 1999, this conversion resulted in expense of $1.3 million with an
additional charge of $381,000 to future periods when the corresponding options
vest. In September 1999, the Company exchanged all of the outstanding SARs for
stock options with the same exercise prices and vesting dates and cancelled its
SAR plans. To account for this exchange, for the year ended December 31, 1999,
the Company simultaneously incurred non-cash compensation expense of $1,254,000
as a component of selling and administrative expense and non-cash income of $2.6
million from the elimination of the related SAR liability. Additionally, the
Company incurred a $381,000 non-cash charge to deferred expenses for rights that
had not vested as of December 31, 1999.

         The stock appreciation rights expense for the year ended December 31,
1999 was $1,950,330. In September 1999, all remaining SARs were converted into
options under our 1999 option plan. Deferred expenses were recorded related to
SARs that had not yet vested. In May 2001 and May 2000, we recognized $75,000
and $306,000, respectively, of those deferred expenses as period costs.

                                      F-17
-------------------------------------------------------------------------------


<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)


8. Income Taxes

         The Company accounts for income taxes in accordance with the provisions
of SFAS No. 109, Accounting for Income Taxes.

         Deferred income taxes reflect the net tax effects at an effective tax
rate of 40% of (a) temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for income
tax purposes, and (b) operating loss and tax credit carryforwards. The tax
effects of significant items comprising the Company's net deferred tax asset as
of December 31, 1999, 2000 and 2001 are as follows (amounts in 000's):

<TABLE>
<CAPTION>
                                                                   1999         2000        2001
                                                                -----------  ----------  ----------
<S>                                                             <C>          <C>         <C>
Deferred tax assets:
   Operating loss carryforwards                                 $   27,388   $  40,684   $  64,199
   Differences between book and tax basis of property                1,561         635       2,409
   Capital loss                                                         --          --         300
   Warrant                                                              --          --      23,180
   Deferred compensation                                            83,678       5,980       1,121
   Other                                                                --          --         142
                                                                -----------  ----------  ----------
Total                                                              112,927      47,299      91,351
Deferred tax liabilities:
Differences between book and tax basis of property                    (305)       (477)         --
                                                                -----------  ----------  ----------

Net deferred tax asset before valuation allowance                  112,322      46,822      91,351
Valuation allowance                                               (112,322)    (46,822)    (91,351)
                                                                -----------  ----------  ----------

Net deferred tax asset                                          $       --   $      --   $      --
                                                                ===========  ==========  ==========
</TABLE>

         The increase in the valuation allowance for the year ended December 31,
2001 was approximately $44.5 million, and the decrease in the valuation
allowance for the year ended December 31, 2000 was approximately $65.5 million.
The increase in the valuation allowance for the year ended December 31, 1999 was
approximately $91.5 million. There was no provision or benefit for federal
income taxes as a result of the net operating loss in the current year.

         Section 382 of the Internal Revenue Code of 1986, as amended, limits
the ability of a corporation that undergoes an "ownership change" to use its net
operating losses to reduce its tax liability. In the event of an ownership
change, we would not be able to use our pre-ownership--change net operating
losses in excess of the limitation imposed by Section 382. This limitation
generally would be calculated by multiplying the value of our stock immediately
before the ownership change by the long-term federal rate.

         At December 31, 2001 and 2000, the Company had Federal net operating
loss ("NOL") carryovers of approximately $160.5 and $115.2 million,
respectively. These carryovers will expire between the years 2002 and 2022.
There may be some limitation on the use of these net operating loss
carryforwards under the Internal Revenue Code Section 382 ownership change
rules.

                                      F-18
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)


         During 2000, the Company entered into an investment that created a
foreign subsidiary called Digital ADCO International. Although there are
currently no material tax implications, the investment may result in an income
tax liability that is not limited by the Company's existing NOL.

9.  Retirement Plan

         The Company sponsors a 401(k) savings plan for employees who have
completed at least one full year of service. The Company has a policy of
matching employee 401(k) deferrals, dollar for dollar, up to the first 5% of the
participating employee's annual compensation. Percentage vesting of the matching
contributions is based on an employee's term of service with the Company,
starting at 20% for employees with more than two years of service, and
increasing ratably to 100% for employees with more than six years of service. To
date, the Company has made all such contributions in the form of its common
stock. In 2001, 2000 and 1999, the Company contributed the common stock
equivalent of $247,275, $154,560, and $132,162, respectively.

10.  Commitments

         At December 31, 2001, future aggregate minimum lease commitments under
non-cancelable operating leases, were as follows:

Year                                          Commitment
----                                         -------------
2002                                         $    961,438
2003                                              909,271
2004                                              791,602
2005                                              557,403
2006                                              427,595
Thereafter                                      4,175,160
                                             -------------
Total                                        $  7,822,469
                                             -------------

         The leases contain customary escalation clauses, based principally on
real estate taxes. Rent expense related to these leases for the years ended
December 31, 2001, 2000 and 1999 aggregated $2,711,375, $1,240,625 and $577,956,
respectively.

11.  Concentration of Credit Risk

         Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and receivables. Concentrations of risk with respect to trade receivables exist
because of the relatively few companies or other organizations with which the
Company currently does business. The Company attempts to limit these risks by
closely monitoring the credit of those to whom it is contemplating providing its
products, and continuing such credit monitoring activities and other collection
activities throughout the payment period. In certain instances, the Company will
further minimize concentrations of credit risks by requiring partial advance
payments for the products provided. The Company's temporary cash investments
consist of investments with high quality financial institutions.

                                      F-19
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

         Individual customers accounted for more than 10% of the Company's
revenues during the years ended 2001, 2000 and 1999. For the year ended December
31, 2001, two individual customers accounted for the following percentages of
sales: 11% and 16%. For the year ended December 31, 2000, an individual customer
accounted for 23% of sales. For the year ended December 31, 1999, four
individual customers accounted for the following percentages of sales: 10%, 10%,
11%, and 12%. In addition, the recognition of revenue resulting from the
amortization of deferred revenue associated with the joint marketing arrangement
with Livewire accounted for approximately 26% and 23% of the Company's total
revenues for the years ended December 31, 2001 and 2000.

         Included in accounts receivable at December 31, 2001 were receivables
from one customer that accounted for 33% of such balance. Included in accounts
receivable at December 31, 2000 were receivables from one customer that
accounted for 32% of such balance.

12.  Fair Value of Financial Instruments

         The Company acquired a warrant to purchase common shares of Liberty
Livewire LLC as described in Note 2. The carrying amounts of other financial
instruments, including cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses, approximated fair value because of their short
maturity.

13.  Segment Reporting

         We have two principal business segments: The Digital Television segment
provides technologies, applications and technical services for interactive
television, targeted advertising, and advertising sales management.

         The Enhanced Media segment, which develops, markets and licenses
technologies, applications and services for the convergence of the Internet with
television and other video programming.

                                      F-20
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

         Information concerning the Company's business segments in 2001, 2000
and 1999 is as follows:

<TABLE>
<CAPTION>

                                                2001             2000            1999
                                           ---------------  --------------  ---------------
<S>                                        <C>              <C>             <C>
Revenues
Digital Television                         $    4,074,434   $          --   $          --
Enhanced Media                                  9,614,181       8,016,453        2,909,642
                                           ---------------  --------------  ---------------
Total                                      $   13,688,615   $   8,016,453   $    2,909,642
                                           ---------------  --------------  ---------------

Depreciation & Amortization
Digital Television                         $    2,870,503   $   1,675,434   $      891,729
Enhanced Media                                  1,631,521       1,183,473          565,466
Unallocated Corporate                           4,931,602       1,048,724          660,901
                                           ---------------  --------------  ---------------
Total                                      $    9,433,626   $   3,907,631   $    2,118,096
                                           ---------------  --------------  ---------------

Interest Income (Expense)
Digital Television                         $      246,454   $     (29,229)  $   (1,014,617)
Enhanced Media                                     10,875           4,709           15,872
Unallocated Corporate                           3,923,594       7,466,830          420,358
                                           ---------------  --------------  ---------------
Total                                      $    4,180,923   $   7,442,310   $     (578,387)
                                           ---------------  --------------  ---------------

Net (Loss)/Income Before Preferred
   Stock Dividends and Accretion
Digital Television                         $   (8,060,807)  $  (8,864,572)  $   (6,203,020)
Enhanced Media                                (67,259,636)    (14,146,874)      (8,069,935)
Unallocated Corporate                         (26,069,366)    175,104,079     (220,601,316)
                                           ---------------  --------------  ---------------
Total                                      $ (101,389,809)  $ 152,092,633   $ (234,875,271)
                                           ---------------  --------------  ---------------

Capital Expenditures
Digital Television                         $    1,815,830   $   2,722,138   $      591,819
Enhanced Media                                     96,430       2,249,498        1,669,750
Unallocated Corporate                           6,093,649       5,966,820          105,348
                                           ---------------  --------------  ---------------
Total                                      $    8,005,909   $  10,938,456   $    2,366,917
                                           ---------------  --------------  ---------------

Current Assets
Digital Television                         $    4,061,843   $  10,290,068   $    1,857,449
Enhanced Media                                  4,735,475       2,382,673        2,240,564
Unallocated Corporate                          72,206,506     114,756,611        7,917,735
                                           ---------------  --------------  ---------------
Total                                      $   81,003,824   $ 127,429,352   $   12,015,748
                                           ---------------  --------------  ---------------

Total Assets
Digital Television                         $   12,022,462   $  17,010,470   $    6,244,009
Enhanced Media                                 24,471,782      83,127,887        6,000,980
Unallocated Corporate                         103,093,077     135,370,223       16,739,389
                                           ---------------  --------------  ---------------
Total                                      $  139,587,321   $ 235,508,580   $   28,984,378
                                           ---------------  --------------  ---------------
</TABLE>

                                      F-21
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)


14.  Investments

         In 2000, the Company entered into various strategic equity investments
in privately held companies that operate in its industry. The Company does not
exercise effective control or significant influence over operations for any of
these strategic equity investments. At December 31, 2000, the investments were
stated at cost, aggregating $3.3 million. During 2000, the Company wrote-off an
investment for $750,000; the charge was recorded in other expenses. During 2001,
the Company increased its gross investment assets by $5.3 million.

         For the year ended December 31, 2001, the Company recorded a writedown,
reflected in other expenses, of $1.0 million related to certain of its strategic
investments that the Company deemed to be other than temporarily impaired. The
balance of the Company's total strategic cost investments is $7.4 million at
December 31, 2001.


15.  Executive Compensation

         For the years ended December 31, 2001 and 2000, and 1999, we incurred
executive incentive compensation expense of $2.3 million $6.9 million, and $3.1
million respectively. This expense, which related to an executive incentive
compensation provision that subsequently was cancelled, was based on changes in
the market value of our common stock and paid in unregistered securities. The
compensation recognized was contingent on continued employment of the executive
and subject to forfeiture.

                                      F-22
-------------------------------------------------------------------------------


<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)


16.  Corporate Restructuring

         During the third and fourth quarters of 2001, we completed certain
restructuring initiatives. As a result, we recorded a restructuring charge
of $6.6 million, which related to the surrender of real estate leases and
employee severance expenses. Components of the $6.6 million expense
included:

o property and equipment with a book value of $10.8 million, which we sold
  for $5.5 million to the successor tenant and landlord (charge of $5.3
  million).

o employee severance expenses of $2.3 million (charge of $2.3 million)

o a reversal of straight-line rent accrual of $1.0 million (reduction of
  charge by $1.0 million)

At December 31, 2001, we had $0.8 million remaining in accrued
restructuring charges to be paid during the first two quarters of 2003.

17.  Supplemental Disclosure of Cash Flow Information

         For the years ended December 31, 2001 and 2000 we recorded deferred
expense of $1.5 million and $4.6 million, respectively, for stock-based
compensation.

         We also recorded revenue of $3.6 million and $1.8 million during the
years ended December 31, 2001 and 2000, respectively, relating to amortization
of the deferred revenue recorded in connection with the Liberty Livewire warrant
(See Note 2).

         The Company made no cash payments of interest or income taxes during
the year ended December 31, 2001. During the years ended December 31, 2000 and
1999, the Company made cash interest payments of $204,976 and $739,263,
respectively, primarily related to the $5.0 million original fair value note,
and no cash payments of income tax.

18.  Digital ADCO

         We record minority interest related to Digital ADCO, in which our
ownership interest was 45.9% at December 31, 2001. Digital ADCO was formed in
November 1999 and co-founded by ACTV, Inc. and Motorola Broadband. Digital ADCO
develops and markets applications for the delivery of addressable advertising.
Under the terms of our agreement with Motorola Broadband, we licensed five of
our patents to Digital ADCO, and Motorola Broadband licensed six of its patents
and made a capital commitment to Digital ADCO. In August 2000, Digital ADCO,
Inc. received a direct minority investment by OpenTV Corp. OpenTV also
contributed patents on a non-exclusive basis to Digital ADCO. Concurrently,
Digital ADCO, Inc. and OpenTV together created a new subsidiary, named SpotOn
International Ltd, to license and exploit Digital ADCO's technology outside the
U.S., Canada and Mexico. Digital ADCO, Inc.'s issued and outstanding shares of
capital stock presently consist of Class A common stock, having one vote per
share and Class B common stock, having 25 votes per share. All of Digital ADCO's
issued and outstanding shares are presently held by three investors. OpenTV
currently owns the issued and outstanding Class A common shares. ACTV, Inc. and
Motorola Broadband, the co-founders of Digital ADCO, own the issued and
outstanding Class B common shares. ACTV, Inc. currently exercises voting control
of Digital ADCO. We consolidate the results of our Digital ADCO subsidiary,
despite our ownership position of 45.9%, due to our exercise of voting control
with respect to such subsidiary.

         For the periods ended December 31, 2001, 2000 and 1999, we allocated
losses/(income) in the amount of $2,890,505, $1,622,957 and ($588),
respectively, from Digital ADCO and SpotOn International, Ltd. to Motorola
Broadband and OpenTV.

                                      F-23
-------------------------------------------------------------------------------
<PAGE>


                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)


19.  Quarterly Results (Unaudited)

The following is a summary of the unaudited quarterly financial information; all
adjustments necessary for a fair presentation of each period were included.

<TABLE>
<CAPTION>

                                                          First          Second         Third          Fourth
Year Ended December 31, 2001                             Quarter        Quarter        Quarter         Quarter
-----------------------------------------------------  -------------  -------------  -------------  --------------
                                                              (Dollars in Thousands Except Per Share Data)
<S>                                                    <C>            <C>            <C>            <C>
Revenues                                               $      3,273   $      4,226   $      3,259   $       2,929
Operating loss                                              (13,956)        (6,818)        (6,055)        (21,187)
(Loss)/income before cumulative effect of
   accounting change                                        (20,377)         8,128         (9,610)        (20,799)

Net (loss)/income                                           (79,109)         8,128         (9,610)        (20,799)

Net (loss)/income per share
Basic
   (Loss) Income before cumulative effect of
     accounting change                                 $      (0.39)  $       0.15   $      (0.17)  $       (0.39)
   Cumulative transition effect of adopting SFAS
     No. 133                                                  (1.12)            --             --              --
                                                       -------------  -------------  -------------  --------------
   Basic net (loss) income per share                   $      (1.51)          0.15   $      (0.17)  $       (0.39)
                                                       =============  =============  =============  ==============

Diluted
   (Loss) income before cumulative effect of
     accounting change                                 $      (0.39)  $       0.14   $      (0.17)  $       (0.39)
   Cumulative transition effect of adopting SFAS
     No. 133                                                  (1.12)            --             --              --
                                                       -------------  -------------  -------------  --------------
   Diluted net (loss)/income                           $      (1.51)  $       0.14   $      (0.17)  $       (0.39)
                                                       =============  =============  =============  ==============

<CAPTION>

                                                          First          Second         Third          Fourth
Year Ended December 31, 2000                               Quarter      Quarter        Quarter         Quarter
-----------------------------------------------------  -------------  -------------  -------------  --------------
<S>                                                    <C>            <C>            <C>            <C>
Revenues                                               $      1,393   $      1,655   $      2,794   $       2,174
Operating income (loss)                                      33,269         84,899         (6,534)         33,434
Net income (loss) before extraordinary item                  34,346         87,405         (3,715)         35,466
Extraordinary item                                               --         (1,411)            --              --

Net income (loss)                                            34,346         85,994         (3,715)         35,466

Net (loss)/income per share
Basic
Income/(loss) before extraordinary item                $       0.76   $       1.73         ($0.07)  $        0.72
Extraordinary item                                               --          (0.03)            --              --
                                                       -------------  -------------  -------------  --------------
Basic net income/(loss) per share applicable to
   common shareholders                                 $       0.76   $       1.70         ($0.07)  $        0.72
                                                       =============  =============  =============  ==============

Diluted
Income/(loss) before extraordinary item                $       0.58   $       1.48         ($0.07)  $        0.58
Extraordinary item                                               --          (0.02)            --              --
                                                       -------------  -------------  -------------  --------------
Diluted net income/(loss) per share applicable to
   common shareholders                                 $       0.58   $       1.46         ($0.07)  $        0.58
                                                       =============  =============  =============  ==============
</TABLE>

                                      F-24
-------------------------------------------------------------------------------


<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

         Earnings per common share are computed independently for each of the
quarters presented. Therefore the sum of the quarters may not be equal to the
full year earnings or per share amounts. Additionally, quarterly amounts for
2000 have been restated to reflect the business combination, which was accounted
for under the pooling method and took place on August 18, 2000.

         Results for the first quarter of 2001 included additional depreciation
and amortization expense in the amount of $1.8 million due to the relocation to
a new facility and the amortization of goodwill related to the purchase of
Intellocity, Inc. The first quarter also included a write-down of an investment
in warrant in the amount of $59.6 million which was classified as a cumulative
transition effect of adopting SFAS 133. Additionally, executive incentive
compensation expense was recorded in the amount of $2.3 million.

         Results for the third quarter of 2001 included a restructuring charge
of $5.6 million. Results for the fourth quarter 2001 included additional
restructuring charges of $1.0 million and a loss on write-down of goodwill of
$11.2 million.

         Results for the second quarter of 2000 included a loss on
extinguishment of debt which was recorded as an extraordinary item. The
extraordinary loss included a prepayment premium of $0.4 and the unamortized
original issue discount of and deferred issue costs of $1.0 million or $0.03 per
share.

20.  Net (Loss)/Income Per Share

The following table sets forth the computation of basic and diluted
(loss)/income per share:

<TABLE>
<CAPTION>
                                                                              Years ended December 31,
                                                                    ----------------------------------------------
                                                                        2001            2000            1999
                                                                    -------------- --------------- ---------------
Numerator:
<S>                                                                 <C>            <C>             <C>
   (Loss)/income before extraordinary item and cumulative effect
     of accounting change                                           $ (42,657,612) $  153,503,772  $ (235,369,702)
   Extraordinary loss on early extinguishment of debt                          --      (1,411,139)             --
   Cumulative transition effect of adopting SFAS No. 133              (58,732,197)             --              --
                                                                    -------------- --------------- ---------------
     Net (loss)income applicable to common stockholders             $(101,389,809) $  152,092,633  $ (235,369,702)

Denominator:
   Basic weighted-average shares outstanding                           55,014,772      49,501,885      38,491,044
   Weighted-average options outstanding                                        --      11,217,763              --
                                                                    -------------- --------------- ---------------
     Diluted weighted average shares outstanding                       55,014,772      60,719,648      38,491,044
                                                                    ============== =============== ===============

Basic
(Loss)/income per share before extraordinary item and cumulative
   effect of accounting change                                      $       (0.77) $         3.10  $        (6.11)
Extraordinary item                                                             --           (0.03)             --
Cumulative transition effect of adopting SFAS No. 133                       (1.07)             --              --
                                                                    -------------- --------------- ---------------
Basic (loss)/income per share                                       $       (1.84) $         3.07  $        (6.11)
                                                                    ============== =============== ===============

Diluted
(Loss)/income per share before extraordinary item and cumulative
   effect of accounting change                                      $       (0.77) $         2.53  $        (6.11)
Extraordinary item                                                             --           (0.02)             --
Cumulative transition effect of adopting SFAS No. 133                       (1.07)             --              --
                                                                    -------------- --------------- ---------------
Diluted (loss)/income per share                                     $       (1.84) $         2.51  $        (6.11)
                                                                    ============== =============== ===============
</TABLE>


                                      F-25
-------------------------------------------------------------------------------


<PAGE>

                           ACTV, INC. AND SUBSIDIARIES
             Notes to the Consolidated Financial Statements for the
            Years Ended December 31, 2001, 2000, and 1999 (Continued)

21.  Restatement

         Subsequent to the issuance of the Company's 2001 financial statements,
management noted an error in the calculation of the minority interest of Digital
ADCO, Inc. and SpotOn International, Ltd. As a result, the Company has restated
its consolidated balance sheets as of December 31, 2001 and 2000 and related
consolidated statements of stockholders' equity for each of the three years in
the period ended December 31, 2001, to reflect adjustments between minority
interest and additional paid in capital. This change has no impact on the
Company's previously reported cash flows or results from operations.

         A summary of the significant effects of the restatement is as follows:

<TABLE>
<CAPTION>
                                                            December 31,
                                  --------------------------------------------------------------
                                               2001                            2000
                                  -----------------------------   ------------------------------
                                         As                              As
                                    Previously                      Previously
Balance Sheet                        Reported       As Restated      Reported       As Restated
-------------                     -------------   -------------   -------------   --------------
<S>                               <C>             <C>             <C>             <C>
Minority Interest                 $  10,100,654   $   3,215,652   $  13,307,131   $    6,422,129

Additional Paid-In Capital          310,611,698     317,496,700     297,073,713      303,958,715

Total Stockholders' Equity           52,787,491      59,672,493     139,869,366      146,754,368
</TABLE>


         The adjustment for 1999 reduced minority interest and increased
additional paid-in capital as of December 31, 1999, by approximately $1.0
million.


                                   F-26
-------------------------------------------------------------------------------

<PAGE>

14.(a)2.  Financial Statement Schedule

         The following Financial Statement Schedule for the years ended December
31, 2001, December 31, 2000 and December 31, 1999 is filed as part of this
Annual Report.

         Schedule II--Valuation and Qualifying Accounts and Reserves

<TABLE>
<CAPTION>

                                                  Column B              Column C              Column D       Column E
                                                -------------   --------------------------   -------------   ------------
                                                 Balance at     Charged to    Charged to                     Balance at
                                                 Beginning       Costs and       Other                         End of
Description                                      of Period       Expenses      Accounts       Deductions       Period
----------------------------------------------- -------------   ------------  ------------   -------------   ------------
<S>                                             <C>             <C>           <C>            <C>             <C>
Year ended 12/31/99:
Accounts receivable allowance for doubtful
   accounts                                               --             --            --              --             --
Year ended 12/31/00:
Accounts receivable allowance for doubtful
   accounts                                               --    $    68,600            --    $     48,600    $    20,000
Year ended 12/31/01:
Accounts receivable allowance for doubtful
   accounts                                     $     20,000    $   187,480            --    $     22,143    $   185,337

</TABLE>

         In 1999 there was no accounts receivable allowance.


                                      F-27
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<PAGE>


         SIGNATURES

         Pursuant to the requirements of Section 13 or 15 (d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned thereunto duly authorized in the City of
New York and State of New York on the 14th day of November 2002.


                                        ACTV, INC.
                                        Registrant

                                        /s/ David Reese
                                        ----------------------------------
                                        David Reese
                                        Chairman, Chief Executive Officer
                                          and Director


         Pursuant to the requirements of the Securities and Exchange Act of
1934, this Report has been signed below by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
       Signature                                       Title                                     Date
-------------------------        -------------------------------------------------       -----------------
<S>                              <C>                                                     <C>
    /s/ David Reese              Chairman, Chief Executive Officer and Director          November 14, 2002
-------------------------
      David Reese

/s/ Christopher C. Cline         Senior Vice President and Chief Financial Officer       November 14, 2002
-------------------------
  Christopher C. Cline

  /s/ Day L. Patterson           Executive Vice President, General Counsel and           November 14, 2002
-------------------------        Secretary
    Day L. Patterson

 /s/ William C. Samuels          Director                                                November 14, 2002
-------------------------
   William C. Samuels

   /s/ John C. Wilcox            Director                                                November 14, 2002
-------------------------
     John C. Wilcox

  /s/ Michael J. Pohl            Director                                                November 14, 2002
-------------------------
    Michael J. Pohl
</TABLE>


                                       22
-------------------------------------------------------------------------------


<PAGE>



               Form of Sarbanes-Oxley Section 302(a) Certification


I, David Reese, Chief Executive Officer of ACTV, Inc., certify that:

1.       I have reviewed this annual report on Form 10-K/A of ACTV, Inc.;

2.       Based on my knowledge, this annual report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

                  a) designed such disclosure controls and procedures to ensure
         that material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

                  b) evaluated the effectiveness of the registrant's disclosure
         controls and procedures as of a date within 90 days prior to the filing
         date of this annual report (the "Evaluation Date"); and

                  c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date.

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

                  a) all significant deficiencies in the design or operation of
         internal controls which could adversely affect the registrant's ability
         to record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

                  b) any fraud, whether or not material, that involves
         management or other employees who have a significant role in the
         registrant's internal controls.

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date: November 14, 2002

                                                     /s/  David Reese
                                                     -----------------------
                                                     David Reese
                                                     Chief Executive Officer



<PAGE>



Form of Sarbanes-Oxley Section 302(a) Certification


I, Christopher C. Cline, Chief Financial Officer of ACTV, Inc., certify that:

1.       I have reviewed this annual report on Form 10-K/A of ACTV, Inc.;

2.       Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

                  a) designed such disclosure controls and procedures to ensure
         that material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

                  b) evaluated the effectiveness of the registrant's disclosure
         controls and procedures as of a date within 90 days prior to the filing
         date of this annual report (the "Evaluation Date"); and

                  c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date.

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

                  a) all significant deficiencies in the design or operation of
         internal controls which could adversely affect the registrant's ability
         to record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

                  b) any fraud, whether or not material, that involves
         management or other employees who have a significant role in the
         registrant's internal controls.

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date: November 14, 2002

                                                 /s/  Christopher C. Cline
                                                 -------------------------
                                                 Christopher C. Cline
                                                 Chief Financial Officer

<PAGE>

                                INDEX TO EXHIBITS

         (a) 3. EXHIBITS (inapplicable items omitted):

Exhibits
--------

2.1            Agreement and Plan of Merger dated March 7, 2001, between ACTV,
               Inc. and Intellocity, Inc. ####
3.1(a)         Restated Certificate of Incorporation of ACTV, Inc. *
3.1(b)         Amendment to Certificate of Incorporation of ACTV, Inc. **
3.1(c)         Deleted.
3.1(d)         Amendment to Certificate of Incorporation of ACTV, Inc. ##
3.1(e)         Amended and Restated Certificate of Incorporation of ACTV, Inc.
               ####
3.2            By-Laws of ACTV, Inc. *
3.2(a)         Amended By-Laws of ACTV, Inc. ####
9.1            Deleted.
9.2            Deleted.
10.1           Deleted.
10.2           Form of 1989 Employee Incentive Stock Option Plan. *
10.3           Form of Amendment No. 1 to 1989 Employee Incentive Stock Option
               Plan. *
10.4           Form of 1989 Employee Non-qualified Stock Option Plan. *
10.5           Form of Amendment No. 1 to 1989 Employee Non-qualified Stock
               Option Plan. *
10.8           1996 Non-qualified Stock Option Plan. ****
10.9           1992 Stock Appreciation Rights Plan. ****
10.10          1996 Stock Appreciation Rights Plan. ****
10.11          Deleted-- replaced by 10.40
10.12          Deleted-- replaced by 10.41
10.13          Deleted-- replaced by 10.42
10.14          Master Programming License Agreement dated December 2, 1996, by
               and between ACTV, Inc. and Liberty/Fox Sports, LLC. ****
10.15          Enhancement License Agreement dated December 4, 1996, by and
               between ACTV, Inc. and Prime Ticket Networks, L.P., d/b/a Fox
               Sports West. ++, ****
10.16          Enhancement License Agreement dated February 28, 1997, by and
               between ACTV, Inc. and ARC Holding, Ltd., d/b/a Fox Sports
               Southwest. ++, ****
10.17          Agreement dated March 30, 1995 between General Instrument
               Corporation and ACTV, Inc.***
10.18          Deleted.
10.19          Deleted.
10.21(a)       Deleted.
10.21(b)       Deleted.
10.21(c)       Option Agreement dated September 29, 1995 between ACTV, Inc. and
               Richard H. Bennett. ***
10.21(d)       Assignment dated September 29, 1995 between ACTV, Inc. and
               Richard H. Bennett. ***
10.21(e)       Deleted -- replaced by 10.44(a).
10.21(f)       Deleted.
10.21(h)       Deleted -- replaced by 10.44(b).
10.21(j)       Deleted -- replaced by 10.44(c).
10.22          Deleted -- expired.
10.23(a)       Deleted -- replaced by 10.43(a).
10.23(b)       Deleted -- replaced by 10.43(b).
10.23(c)       Deleted -- replaced by 10.43(c).


                                       23
-------------------------------------------------------------------------------


<PAGE>


10.23(d)       Deleted.
10.23(e)       Deleted.
10.23(f)       Deleted.
10.23(g)       Deleted.
10.24(a)       Deleted.
10.24(b)       Deleted.
10.24(c)       Deleted.
10.24(d)       Deleted.
10.24(e)       Deleted.
10.25(a)       Deleted.
10.25(b)       Deleted.
10.25(c)       Deleted.
10.26(a)       Deleted.
10.26(b)       Deleted.
10.26(c)       Deleted.
10.26(d)       Deleted.
10.26(e)       Deleted.
10.26(f)       Deleted.
10.26(f)1      Deleted.
10.26(g)       Deleted.
10.26(h)       Deleted.
10.26(i)       Deleted.
10.26(j)       Deleted.
10.26(k)       Deleted.
10.26(l)       Deleted.
10.26(l)1      Deleted.
10.27          Deleted.
10.28          Deleted.
10.29          Deleted.
10.30          Deleted-- replaced by 10.45
10.31          Deleted-- replaced by 10.46
10.32          Deleted.
10.33          Deleted.
10.34          Deleted.
10.35          Deleted.
10.36          Deleted.
10.37          Deleted.
10.38          Deleted.
10.39          Deleted.
10.40          Deleted-- superseded by 10.40.2
10.41.1        Deleted-- superseded by 10.40.2.
10.40.2        Deleted.
10.41          Deleted -- superseded by 10.41.1.
10.41.1        Employment agreement dated as of August 1, 1995, as amended
               October 6, 1999, between ACTV, Inc. and David Reese. ++++
10.42          Deleted -- superseded by 10.42.2.


                                       24
-------------------------------------------------------------------------------


<PAGE>


10.42.1        Deleted -- superseded by 10.42.2.
10.42.2        Employment agreement dated as of August 1, 1995, as amended
               January 18, 2001, between ACTV, Inc. and Bruce Crowley. ####
10.43(a)       Deleted -- superseded by 10.51.
10.43(b)       Deleted -- superseded by 10.52.
10.43(c)       Deleted -- superseded by 10.53.
10.44(a)       Deleted -- superseded by 10.44(a)1.
10.44(a)1      Amended stock option agreement dated December 1, 1995
               between ACTV, Inc. and William Samuels. ++++
10.44(b)       Deleted -- superseded by 10.44(b)1.
10.44(b)1      Amended stock option agreement dated December 1, 1995
               between ACTV, Inc. and David Reese. ++++
10.44(c)       Deleted-- superseded by 10.44(c)1.
10.44(c)1      Amended stock option agreement dated December 1, 1995
               between ACTV, Inc. and Bruce Crowley. ++++
10.45          Amended license agreement dated March 8, 1999, between ACTV,
               Inc. and ACTV Entertainment, Inc., amending and restating in
               full the agreement dated March 14, 1997. +++
10.46          Amended license agreement dated March 8, 1999, between ACTV,
               Inc. and HyperTV Networks, Inc., amending and restating in
               full the agreement dated March 13, 1997. +++
10.47          Patent assignment and license agreement between ACTV, Inc.
               and Earthweb, Inc. dated December 1, 1997. +++
10.48          Deleted
10.48.1        Deleted.
10.49          Deleted.
10.50          Deleted.
10.51          Deleted -- superseded by 10.51.1
10.51.1        Stock option agreement dated February 21, 1998, as amended
               January 10, 2001, between ACTV, Inc. and William C. Samuels.
               ####
10.52          Deleted -- superseded by 10.52.1
10.52.1        Stock option agreement dated February 21, 1998, as amended
               January 10, 2001, between ACTV, Inc. and Bruce Crowley. ####
10.53          Deleted -- superseded by 10.53.1
10.53.1        Stock option agreement dated February 21, 1998, as amended
               January 10, 2001, between ACTV, Inc. and David Reese. ####
10.54          Lease dated as of December 1, 1999 between 225 Fourth, LLC,
               as landlord, and ACTV, Inc., as tenant. ++++
10.54.1        Lease dated as of December 1, 1999, as amended May 23, 2000,
               between 225 Fourth, LLC, as landlord, and ACTV, Inc., as
               tenant. ####
10.54.2        Fourth amendment to lease as of October 5, 2001, between 225
               Fourth, LLC, as landlord, and ACTV, Inc., as tenant.@
10.55          2000 Stock Incentive Plan ##
10.56          Cooperative Venture Agreement dated April 13, 2000 by and
               among HyperTV Networks, Inc., Liberty Livewire LLC, and
               HyperTV with Livewire, LLC. ###
10.57          Employment agreement dated as of October 1, 2000 between
               ACTV, Inc. and Kevin M. Liga. ####
10.58          Deleted.


                                       25
-------------------------------------------------------------------------------

<PAGE>


10.59          2001 Stock Incentive Plan. #
21             Subsidiaries of the Registrant ####
23.1           Independent Auditors' Consent. @
99.1           Certification by David Reese, Chief Executive Officer, under
               Section 906 of the Sarbanes-Oxley Act of 2002. @
99.2           Certification by Christopher C. Cline, Chief Financial
               Officer, under Section 906 of the Sarbanes-Oxley Act of
               2002. @


----------------------
*        Incorporated by reference from Form S-1 Registration Statement
         (File No. 33-34618)
**       Incorporated by reference to ACTV, Inc.'s Form 10-K for the year
         ended December 31, 1993.
***      Incorporated by reference from Form S-1 Registration Statement
         (File No. 33-63879) which became effective on February 12, 1996.
****     Incorporated by reference to ACTV, Inc.'s Form 10-K for the year
         ended December 31, 1996.
*****    Incorporated by reference from the Exhibits to Schedule 13D filed
         by Value Partners, Ltd. on January 23, 1998.
******   Incorporated by reference from Form S-3 Registration Statement
         filed on December 30, 1998.
+        Incorporated by reference to ACTV, Inc.'s Form 10-K for the year
         ended December 31, 1997.
++       Certain information contained in this exhibit has been omitted and
         filed separately with the Commission along with an application for
         non-disclosure of information pursuant to Rule 24b-2 of the
         Securities Act of 1933, as amended.
+++      Incorporated by reference to ACTV, Inc.'s Form 10-K for the year
         ended December 31, 1998.
++++     Incorporated by reference to ACTV, Inc.'s Form 10-K for the year
         ended December 31, 1999.
#        Incorporated by reference to ACTV, Inc.'s Definitive Proxy
         Statement on Schedule 14A filed with the Commission on August 3,
         2001.
##       Incorporated by reference to ACTV, Inc.'s Definitive Proxy
         Statement on Schedule 14A filed with the Commission on April 17,
         2000.
###      Incorporated by reference to ACTV, Inc.'s amended quarterly report
         on Form 10Q/A for the quarter ended June 30, 2000
####     Incorporated by reference to ACTV, Inc.'s Form 10-K for the year
         ended December 31, 2000.
@        Filed herewith

                                       26
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